Study on Cost Control Approaches in Medical Insurance Market--Analysis on the Basis of a Principal-Agent Relationship of Three Participants

As a way of risk management, insurance plays an important role in people´s daily life. Health insurance becomes one of the most concerned types of insurance because it related to health, which is paid much attention by people. Because of information asymmetry and the participation of physician, health insurance market has developed a unique principal-agent relationship of three participants, which creates a barrier to its normal operation. This paper defined the special nature of medical insurance market at first. The problems of insured´s moral hazard and physician´s supplier-induced demand were analyzed at the main part. Relevant conclusions were summarized at the last part.