1 / 30

Five countries

Risk adjustment and consumer choice of sickness fund in five European countries: solidarity, efficiency and quality of care Wynand P.M.M. van de Ven Professor of Health Insurance Erasmus University Rotterdam Email : vandeven@bmg.eur.nl. Five countries. Belgium Germany Israel

jens
Download Presentation

Five countries

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript


  1. Risk adjustment and consumer choice of sickness fund in five European countries: solidarity, efficiency and quality of care Wynand P.M.M. van de Ven Professor of Health Insurance Erasmus University Rotterdam Email: vandeven@bmg.eur.nl brussel

  2. Five countries Belgium Germany Israel The Netherlands Switzerland brussel

  3. Recent development • Enlarging the consumer choice of sickness fund; • Increasing the financial responsibility of sickness funds. brussel

  4. Rationale The rationale is to stimulate the sickness funds to improve efficiency in health care production and to respond to consumers’ preferences. brussel

  5. Common problem In case of imperfect risk adjustment the sickness funds have financial incentives to select the predictably profitable consumers. This selection and the resulting market segmentation may have serious adverse effects. brussel

  6. Agenda: • Conceptual framework and rationale of good risk adjustment; • The practice in five European countries; • Discussion. brussel

  7. Great challenge How to combine solidarity and consumer choice of sickness fund? brussel

  8. Solidarity contribution Premium subsidy Sickness Fund Consumer Premium Contribution Solidarity Fund brussel

  9. Solidarity Fund Solidarity contribution Premium subsidy Sickness Fund Consumer Contribution* *contribution = solidarity contribution plus premium contribution brussel

  10. Policy relevance of risk adjustment The policy relevance of risk adjustment is that, in theory, perfectly risk-adjusted premium subsidies may combine solidarity and a competitive health insurance market. In practice, however, perfect risk adjustment is still a long way off. brussel

  11. Premium rate restrictions For reasons of solidarity government imposes restrictions on the variation of the premium contributions. These restrictions create incentives for selection. brussel

  12. Selection • Actions (not including risk-rated pricing by insurers) by insurers and consumers to exploit unpriced risk heterogeneity and break pooling arrangements; • The outcome of these actions. brussel

  13. How to prevent selection? • Mandatory health insurance; • open enrolment requirement; • Standardized benefits package; • Additional procompetitive regulation; • Adequate risk adjustment (or risk equalization); • Risk sharing between the sponsor and the insurers. brussel

  14. Are age and gender sufficient? If the RAPS are only based on age and gender, then an insurer will, roughly speaking, make: • a predictable loss of about 100% for the 10% of the population with the worst health status; • a predictable profit of about 25 to 40% for the healthiest half of the population. brussel

  15. Predictable cost variation within an age-gender group The five percent individuals with the highest health care expenditures in a year can be predicted to have total expenditures over the next four years that are twice the average expenditures within their age-gender group. brussel

  16. Possible forms of c.s. at enrollment: 1.Contracting only with selected providers; 2.Design of benefits package; 3.Insurance agent; 4.Package deal; 5.Selective advertising. brussel

  17. Possible forms of c.s. at disenrollment 1.Low quality of care; 2.Design of benefits package; 3.Poor services; 4.Golden hand shake. brussel

  18. Adverse effects of cream skimming 1.A disincentive to be responsive to the preferences of high-risk consumers; 2.Cream skimming is more attractive than improving efficiency. brussel

  19. Prevention of cream skimming Two major strategies to reduce cream skimming: • Risk adjustment (or: risk equalisation); • Risk sharing. brussel

  20. Criteria for choosing among risk adjustment models • Appropriateness of incentives: • No incentives for selection; • Incentives for efficiency; • Incentives for health-improving activities; • No incentives to distort information to the sponsor. • Fairness: • No compensation for N-type risk factors; • No compensation for risk factors which reflect underutilization; • Predictive value. • Feasibility. brussel

  21. Risk-adjusters • Prior utilization combined with diagnostic information; • Disability; • Self-reported chronic conditions; • Consumer-choice of a high- or low-option plan. brussel

  22. Prior utilization: • Best single predictor of an individual’s future health expenditures; • Two major criticisms: 1.No regard is paid to the appropriateness of the care; 2.Average relationship between prior use and subsequent cost. Solution: Diagnostic information brussel

  23. The practice of risk-adjustment and risk-sharing in 5 countries brussel

  24. Implementation of Risk Adjustment in practice: very complex! Lack of data at individual level; Lack of data for health adjustment; Appropriate incentives: often not used as a relevant criterion. Implementation problems brussel

  25. Switchers: 1-5 percent of the population, per year; Most switchers are young and healthy; risk adjusters: age: implemented in all five countries; health: not (yet) implemented in any of the five countries; Small insurers are winners, large insurers are losers. Switchers brussel

  26. Is selection a problem? brussel

  27. Via supplementary health insurance; Selective advertising; Virtual (internet) sickness fund; Employer-related (group) sickness fund; Via limited provider plans (HMOs/PPOs). Selection activities, given open enrollment brussel

  28. Conclusion Good risk adjustment (or ex-ante risk equalization) is a necessary condition to reap the fruits of giving the consumers a choice of sickness fund. brussel

  29. Rationale of consumer choice of sickness fund In the literature “consumer choice of sickness fund”is associated with the model that government allows individual sickness funds to be a prudent buyer of care, or to “manage the care”. brussel

  30. Politicians must make an explicit choice Who is the third-party purchaser of care: • Government, or a cartel of sickness funds; • Individual risk-bearing sickness funds. In the first option it is hard to think of any rational argument for giving consumers a periodic choice among risk-bearing sickness funds. brussel

More Related