Final answer:
The term for the contractual right of a third-party payer to recover health care expenses from a liable party is subrogation. It allows an insurance company to step into the shoes of the insured and seek reimbursement from those responsible for the insured's losses, ensuring the fulfillment of contractual and property rights.
Step-by-step explanation:
The contractual right of a third-party payer to recover health care expenses from a liable party is referred to as subrogation. This is an important feature in insurance contracts allowing an insurer to take on the legal rights of the insured to pursue recovery from a third party that may be liable for the insured's losses. In the context of health care, this could involve an insurance company seeking reimbursement from a party that caused injury resulting in medical expenses for which the insurance company paid on behalf of their insured.
Strong contractual rights and property rights ensure that individuals can transact with confidence, entering into agreements and expecting those contracts to be enforced. For instance, a surgeon expects payment for services rendered, which is a form of property right. Should the patient fail to pay, this would be seen as a theft of services. Recourse through the legal system ensures that contracts are honored and economic transactions can proceed smoothly.
On the flip side, insurance market dynamics, such as adverse selection, influence the behavior of parties in seeking and providing insurance. Adverse selection arises when an individual with a higher risk of requiring healthcare is more likely to purchase insurance, whereas a lower-risk individual might forego it due to cost.