Konstantin Beck - Academia.edu (original) (raw)

Papers by Konstantin Beck

Health Policy, 2016

Risk equalization mechanisms mitigate insurers' incentives to practice risk selec... more Risk equalization mechanisms mitigate insurers' incentives to practice risk selection. On the other hand, incentives to limit healthcare spending can be distorted by risk equalization, particularly when risk equalization payments depend on realized costs instead of expected costs. In addition, cost based risk equalization mechanisms may incentivize health insurers to distort the allocation of resources among different services. The incentives to practice risk selection, to limit healthcare spending, and to distort the allocation of resources can be measured by fit, power, and balance, respectively. We apply these three measures to evaluate the risk adjustment mechanism in Switzerland. Our results suggest that it performs very well in terms of power but rather poorly in terms of fit. The latter indicates that risk selection might be a severe problem. We show that re-insurance can reduce this problem while power remains on a high level. In addition, we provide evidence that the Swiss risk equalization mechanism does not lead to imbalances across different services.

SSRN Electronic Journal, 2000

An important goal of risk-adjusted capitation payments (RACPs) to competitive community-rated hea... more An important goal of risk-adjusted capitation payments (RACPs) to competitive community-rated health plans—that may differ in coverage and/or the organisation of delivering care—is to reduce incentives for risk selection while maintaining incentives for efficiency. In most schemes, RACPs are simply based on the average observed costs in risk groups (in a prior year). We show that under this procedure, incentives

Journal of Health Economics, Apr 1, 2010

This paper seeks to create new insights when judging the impact different risk adjustment schemes... more This paper seeks to create new insights when judging the impact different risk adjustment schemes may have on the incentive to select risks. It distinguishes risk types with high and low profit potential and estimates long-run profits associated with risk selection in four scenarios (no risk adjustment, demographic only, including prior hospitalization, and including prior hospitalization and Pharmaceutical Cost Groups). The database covers 180,000 Swiss individuals over 8 years, 3 of which are used for model building and 5, to estimate insurers' profits due to risk selection in the four scenarios. While these profits prove to be very high without risk adjustment and still substantial with demographic risk adjustment, they become surprisingly low when the crude morbidity indicator 'prior hospitalization' is included in the formula. These results clearly indicate the need for health status-related risk adjustment in insurance markets with community rating, taking into account insurers' planning horizon.

BMJ supportive & palliative care, Jan 15, 2015

Exploration of healthcare utilisation patterns in the final life year to assess palliative care p... more Exploration of healthcare utilisation patterns in the final life year to assess palliative care potential. Retrospective cluster analyses (k-means) of anonymised healthcare expenditure (HCE) trajectories, derived from health insurance claims of a representative sample of Swiss decedents who died between 2008 and 2010 (2 age classes: 4818 <66 years, 22 691 elderly). 3 (<66 years) and 5 (elderly) trajectory groups were identified, whose shapes were dominated by HCE from inpatient care in hospitals and at nursing homes. In each age class, the most expensive group (average cumulative HCE for <66 years: SFr 84 295; elderly: SFr 84 941) also had the largest abundance of cancers (<66 years: 55%; elderly: 32%) and showed signs of continued treatment intensification until shortly before death. Although sizes of these high-cost groups were comparatively small (26% in younger; 6% in elderly), they contributed substantially to the end-of-life HCE in each age class (62% and 18%, resp...

Rationale: There is a broad consensus that given community-rated premiums, risk equalization beco... more Rationale: There is a broad consensus that given community-rated premiums, risk equalization becomes a necessary regulation of health insurance markets. However, the specification of risk equalization has remained controversial. Most of the empirical literature tests for the relationships between different morbidity indicators and HCE within one year. Such a short time horizon is not in accordance with the strong incentive for insurers to keep their members in long-term contracts in view of considerable acquisition expense. Objectives: This paper seeks to analyze the effectiveness and sustainability of risk equalization by distinguishing risk types with high and low profit potential and by estimating long-run profits of risk selection in four scenarios (no risk equalization, demographic only, in-cluding prior hospitalization, and including prior hospitalization and Pharmaceutical Cost Groups). Methodology: Expected gains from risk selection are estimated based on predicted HCE net o...

Preventive Medicine Reports, 2015

In Switzerland, basic health insurance is mandatory for all inhabitants, but a rising number of i... more In Switzerland, basic health insurance is mandatory for all inhabitants, but a rising number of insured have arrears in premium payments, potentially leading to coverage suspension. We aimed at characterizing insured with debt enforcement proceedings with respect to socio-demographic and health utilization aspects. Cross-sectional analysis of 508.000 insured with basic health insurance contracts in 2013, of whom 14,000 (2.8%) with debt enforcement proceedings, from 11 Swiss cantons. Groups were characterized using logistic regression and latent class analysis. Insured with debt enforcement proceedings were more likely to be young, male and without dependents (partner, kids). Having no supplementary insurance and receiving partial premium subsidies was associated with an increased debt enforcement proceedings risk. Within the debt enforcement proceedings group, three subgroups were identified: 60% were young and seemingly healthy, with a below-average fraction of premium subsidy recipients (18%) and low out-of-pocket payments in prior year (median Swiss Francs 0). Two groups consisted of relatively ill elderly persons (22%, 99% of whom with chronic illnesses) or families (18%), many of whom (29% and 51%) were recipients of premium subsidies. Median out-of-pocket payments in the prior year were high (Swiss Francs 625 and 688, respectively). Sixty percent of premium arrears derive from young insured without apparent financial problems; 40% are owed by elderly and families, which are potentially hurt by coverage loss.

Health Economics Review, 2014

In Switzerland, age is the predominant driver of solidarity transfers in risk adjustment (RA). Co... more In Switzerland, age is the predominant driver of solidarity transfers in risk adjustment (RA). Concerns have been voiced regarding growing imbalances in cost sharing between young and old insured due to demographic changes (larger fraction of elderly &amp;amp;amp;amp;gt;65 years and rise in average age). Particularly young adults aged 19-25 with limited incomes have to shoulder increasing solidarity burdens. Between 1996 and 2011, monthly intergenerational solidarity payments for young adults have doubled from CHF 87 to CHF 182, which corresponds to the highest absolute transfer increase of all age groups. By constructing models for age-specific RA growth and for calculating the lifetime sum of RA transfers we investigated the causes and consequences of demographic changes on RA payments. The models suggest that the main driver for RA increases in the past was below average health care expenditure (HCE) growth in young adults, which was only half as high (average 2% per year) compared with older adults (average 4% per year). Shifts in age group distributions were only accountable for 2% of the CHF 95 rise in RA payments. Despite rising risk adjustment debts for young insured the balance of lifetime transfers remains positive as long as HCE growth rates are greater than the discount rate used in this model (3%). Moreover, the life-cycle model predicts that the lifetime rate of return on RA payments may even be further increased by demographic changes. Nevertheless, continued growth of RA contributions may overwhelm vulnerable age groups such as young adults. We therefore propose methods to limit the burden of social health insurance for specific age groups (e.g. young adults in Switzerland) by capping solidarity payments. Taken together, our mathematical modelling framework helps to gain a better understanding of how demographic changes interact with risk adjustment and how redistribution of funds between age groups can be controlled without inducing further selection incentives. Those methods can help to construct more equitable systems of health financing in light of population aging.

The European journal of health economics : HEPAC : health economics in prevention and care, Jan 8, 2015

Community rating in social health insurance calls for risk adjustment in order to eliminate incen... more Community rating in social health insurance calls for risk adjustment in order to eliminate incentives for risk selection. Swiss risk adjustment is known to be insufficient, and substantial risk selection incentives remain. This study develops five indicators to monitor residual risk selection. Three indicators target activities of conglomerates of insurers (with the same ownership), which steer enrollees into specific carriers based on applicants' risk profiles. As a proxy for their market power, those indicators estimate the amount of premium-, health care cost-, and risk-adjustment transfer variability that is attributable to conglomerates. Two additional indicators, derived from linear regression, describe the amount of residual cost differences between insurers that are not covered by risk adjustment. All indicators measuring conglomerate-based risk selection activities showed increases between 1996 and 2009, paralleling the establishment of new conglomerates. At their maxi...

Developments in health economics and public policy, 1998

Policymakers fear that health insurers when exposed to competition will engage in cream-skimming ... more Policymakers fear that health insurers when exposed to competition will engage in cream-skimming (i.e. selection of good risks) rather than trying to improve their benefit to premium ratio. This fear surfaced also when Swiss federal government proposed pro-competitive Law on social health insurance, which barely passed a popular referendum in 1994. While a risk equalization mechanism based on age, gender, and place of residence has already been created, there is a considerable interest in improving its formula. This paper shows that a dummy variable indicating an individual's death during the period of observation causes the coefficient of determination to jump from 0.039 to 0.111. More-over, simulations of the risk selection process suggest that risk equalization should be made a permanent institution rather than being limited to a life of 10 years as prescribed by present legislation. In fact, the formula in use, with all its shortcomings, can be shown to neutralize to a great...

SSRN Electronic Journal, 2000

The main objective ofrisk adjustment in systems ofregulated competition on healthinsurance market... more The main objective ofrisk adjustment in systems ofregulated competition on healthinsurance markets is the removal ofincentives f or undesirable risk selection.W e introduce a simple conceptual f ramework to clarif y how the definition of"acceptable costs"and the distinction between legitimate and illegitimate risk adjusters imply di cult ethical trade-o s between equity, avoidance ofundesirable risk selection and cost-e ectiveness. Focusing on the situation in Belgium, Germany, I srael, the Netherlands and Switzerland, we show how di erences in the importance attached to solidarity and in the belief s about market e ciency, have led to di erent decisions with respect to the definition ofthe basic benefits package, the choice ofrisk-adjusters, the possibilities ofmanaged care, the degree of consumer choice and the relative importance ofincome-related financing sources in the overall system.

Journal of Health Economics, 2010

This paper seeks to create new insights when judging the impact different risk adjustment schemes... more This paper seeks to create new insights when judging the impact different risk adjustment schemes may have on the incentive to select risks. It distinguishes risk types with high and low profit potential and estimates long-run profits associated with risk selection in four scenarios (no risk adjustment, demographic only, including prior hospitalization, and including prior hospitalization and Pharmaceutical Cost Groups). The database covers 180,000 Swiss individuals over 8 years, 3 of which are used for model building and 5, to estimate insurers' profits due to risk selection in the four scenarios. While these profits prove to be very high without risk adjustment and still substantial with demographic risk adjustment, they become surprisingly low when the crude morbidity indicator 'prior hospitalization' is included in the formula. These results clearly indicate the need for health status-related risk adjustment in insurance markets with community rating, taking into account insurers' planning horizon.

Journal of Health Economics, 2012

Microeconomic theory predicts that if patients are fully insured and providers are paid fee-for-s... more Microeconomic theory predicts that if patients are fully insured and providers are paid fee-for-service, utilization of medical services exceeds the efficient level ('moral hazard effect'). In Switzerland, both demand-side cost sharing and supply-side cost sharing have been introduced to mitigate this problem. Analyzing a panel dataset of about 150,000 adults, we find both types of cost sharing to be effective in curtailing the use of medical services. However, demand-side cost sharing options are preliminarily chosen by individuals in excellent health, causing 'true' cost savings achieved by supply-side cost sharing to be more important.

Health Policy, 2007

In this paper we analyse the developments concerning risk adjustment and risk selection in Belgium,

Health Policy, 2003

In Switzerland the new law on Health Insurance, effective since 1996, introduced pro competitive ... more In Switzerland the new law on Health Insurance, effective since 1996, introduced pro competitive changes in the market of sickness funds. The legislator expected high mobility between sickness funds of both healthy and sick insured as open enrolment was introduced with the new law. That is why the risk adjustment scheme, that was already introduced 1993, was limited until 2005. However, consumer mobility remained low and risk selection strategies are still profitable, since risk-adjustment is based only on demographic variables. This paper describes risk adjustment, consumer mobility, risk selection activities of sickness funds and the impact of imperfect risk adjustment on the development of HMO and PPO models. The paper concludes with a description of the current political and scientific discussion in Switzerland.

Health Policy, 2013

From the mid-1990s several countries have introduced elements of regulated competition in healthc... more From the mid-1990s several countries have introduced elements of regulated competition in healthcare. The aim of this paper is to identify the most important preconditions for achieving efficiency and affordability under regulated competition in healthcare, and to indicate to what extent these preconditions are fulfilled in Belgium, Germany, Israel, the Netherlands and Switzerland. These experiences can be worthwhile for other countries (considering) implementing regulated competition (e.g. Australia, Czech Republic, Ireland, Russia, Slovakia, US). We identify and discuss ten preconditions derived from the theoretical model of regulated competition and assess the extent to which each of these preconditions is fulfilled in Belgium, Germany, Israel, the Netherlands and Switzerland. After more than a decade of healthcare reforms in none of these countries all preconditions are completely fulfilled. The following preconditions are least fulfilled: consumer information and transparency, contestable markets, freedom to contract and integrate, and competition regulation. The extent to which the preconditions are fulfilled differs substantially across the five countries. Despite substantial progress in the last years in improving the risk equalization systems, insurers are still confronted with substantial incentives for risk selection, in particular in Israel and Switzerland. Imperfect risk adjustment implies that governments are faced with a complex tradeoff between efficiency, affordability and selection. Implementing regulated competition in healthcare is complex, given the preconditions that have to be fulfilled. Moreover, since not all preconditions can be fulfilled simultaneously, tradeoffs have to be made with implications for the levels of efficiency and affordability that can be achieved. Therefore the optimal set of preconditions is not only an empirical question but ultimately also a matter of societal preferences.

Health Economics, Policy and Law, 2007

As the share of supplementary health insurance (SI) in health care finance is likely to grow, SI ... more As the share of supplementary health insurance (SI) in health care finance is likely to grow, SI may become an increasingly attractive tool for riskselection in basic health insurance (BI). In this paper, we develop a conceptual framework to assess the probability that insurers will use SI for favourable riskselection in BI. We apply our framework to five countries in which risk-selection via SI is feasible: Belgium, Germany, Israel, the Netherlands, and Switzerland. For each country, we review the available evidence of SI being used as selection device. We find that the probability that SI is and will be used for risk-selection substantially varies across countries. Finally, we discuss several strategies for policy makers to reduce the chance that SI will be used for risk-selection in BI markets.

The Geneva Papers on Risk and Insurance Issues and Practice, 2010

An important goal of risk-adjusted capitation payments (RACPs) to competitive communityrated heal... more An important goal of risk-adjusted capitation payments (RACPs) to competitive communityrated health plans-that may differ in coverage and/or the organisation of delivering careis to reduce incentives for risk selection while maintaining incentives for efficiency. In most schemes, RACPs are simply based on the average observed costs in risk groups (in a prior year). We show that under this procedure, incentives for efficiency will not always be maintained: when identical risk types are concentrated in the same health plans-due to selection, specialisation or just coincidence-cost savings can be captured by the RACPs and leak away from these plans. money for each enrollee on their list, adjusted for risk characteristics such as age, gender and health status. 2 Given the requirement of community-rating, the goal of RACPs is to reduce incentives for risk selection while maintaining incentives for efficiency in production. 3 As defined by Newhouse, 4 "risk selection" includes actions of consumers and health plans to exploit unpriced risk heterogeneity and break pooling arrangements, and efficiency in production" (further: efficiency) means choosing the least costly treatment for a patient's medical problem, holding quality constant.

Health Policy, 2016

Risk equalization mechanisms mitigate insurers&amp;amp;#39; incentives to practice risk selec... more Risk equalization mechanisms mitigate insurers&amp;amp;#39; incentives to practice risk selection. On the other hand, incentives to limit healthcare spending can be distorted by risk equalization, particularly when risk equalization payments depend on realized costs instead of expected costs. In addition, cost based risk equalization mechanisms may incentivize health insurers to distort the allocation of resources among different services. The incentives to practice risk selection, to limit healthcare spending, and to distort the allocation of resources can be measured by fit, power, and balance, respectively. We apply these three measures to evaluate the risk adjustment mechanism in Switzerland. Our results suggest that it performs very well in terms of power but rather poorly in terms of fit. The latter indicates that risk selection might be a severe problem. We show that re-insurance can reduce this problem while power remains on a high level. In addition, we provide evidence that the Swiss risk equalization mechanism does not lead to imbalances across different services.

SSRN Electronic Journal, 2000

An important goal of risk-adjusted capitation payments (RACPs) to competitive community-rated hea... more An important goal of risk-adjusted capitation payments (RACPs) to competitive community-rated health plans—that may differ in coverage and/or the organisation of delivering care—is to reduce incentives for risk selection while maintaining incentives for efficiency. In most schemes, RACPs are simply based on the average observed costs in risk groups (in a prior year). We show that under this procedure, incentives

Journal of Health Economics, Apr 1, 2010

This paper seeks to create new insights when judging the impact different risk adjustment schemes... more This paper seeks to create new insights when judging the impact different risk adjustment schemes may have on the incentive to select risks. It distinguishes risk types with high and low profit potential and estimates long-run profits associated with risk selection in four scenarios (no risk adjustment, demographic only, including prior hospitalization, and including prior hospitalization and Pharmaceutical Cost Groups). The database covers 180,000 Swiss individuals over 8 years, 3 of which are used for model building and 5, to estimate insurers' profits due to risk selection in the four scenarios. While these profits prove to be very high without risk adjustment and still substantial with demographic risk adjustment, they become surprisingly low when the crude morbidity indicator 'prior hospitalization' is included in the formula. These results clearly indicate the need for health status-related risk adjustment in insurance markets with community rating, taking into account insurers' planning horizon.

BMJ supportive & palliative care, Jan 15, 2015

Exploration of healthcare utilisation patterns in the final life year to assess palliative care p... more Exploration of healthcare utilisation patterns in the final life year to assess palliative care potential. Retrospective cluster analyses (k-means) of anonymised healthcare expenditure (HCE) trajectories, derived from health insurance claims of a representative sample of Swiss decedents who died between 2008 and 2010 (2 age classes: 4818 <66 years, 22 691 elderly). 3 (<66 years) and 5 (elderly) trajectory groups were identified, whose shapes were dominated by HCE from inpatient care in hospitals and at nursing homes. In each age class, the most expensive group (average cumulative HCE for <66 years: SFr 84 295; elderly: SFr 84 941) also had the largest abundance of cancers (<66 years: 55%; elderly: 32%) and showed signs of continued treatment intensification until shortly before death. Although sizes of these high-cost groups were comparatively small (26% in younger; 6% in elderly), they contributed substantially to the end-of-life HCE in each age class (62% and 18%, resp...

Rationale: There is a broad consensus that given community-rated premiums, risk equalization beco... more Rationale: There is a broad consensus that given community-rated premiums, risk equalization becomes a necessary regulation of health insurance markets. However, the specification of risk equalization has remained controversial. Most of the empirical literature tests for the relationships between different morbidity indicators and HCE within one year. Such a short time horizon is not in accordance with the strong incentive for insurers to keep their members in long-term contracts in view of considerable acquisition expense. Objectives: This paper seeks to analyze the effectiveness and sustainability of risk equalization by distinguishing risk types with high and low profit potential and by estimating long-run profits of risk selection in four scenarios (no risk equalization, demographic only, in-cluding prior hospitalization, and including prior hospitalization and Pharmaceutical Cost Groups). Methodology: Expected gains from risk selection are estimated based on predicted HCE net o...

Preventive Medicine Reports, 2015

In Switzerland, basic health insurance is mandatory for all inhabitants, but a rising number of i... more In Switzerland, basic health insurance is mandatory for all inhabitants, but a rising number of insured have arrears in premium payments, potentially leading to coverage suspension. We aimed at characterizing insured with debt enforcement proceedings with respect to socio-demographic and health utilization aspects. Cross-sectional analysis of 508.000 insured with basic health insurance contracts in 2013, of whom 14,000 (2.8%) with debt enforcement proceedings, from 11 Swiss cantons. Groups were characterized using logistic regression and latent class analysis. Insured with debt enforcement proceedings were more likely to be young, male and without dependents (partner, kids). Having no supplementary insurance and receiving partial premium subsidies was associated with an increased debt enforcement proceedings risk. Within the debt enforcement proceedings group, three subgroups were identified: 60% were young and seemingly healthy, with a below-average fraction of premium subsidy recipients (18%) and low out-of-pocket payments in prior year (median Swiss Francs 0). Two groups consisted of relatively ill elderly persons (22%, 99% of whom with chronic illnesses) or families (18%), many of whom (29% and 51%) were recipients of premium subsidies. Median out-of-pocket payments in the prior year were high (Swiss Francs 625 and 688, respectively). Sixty percent of premium arrears derive from young insured without apparent financial problems; 40% are owed by elderly and families, which are potentially hurt by coverage loss.

Health Economics Review, 2014

In Switzerland, age is the predominant driver of solidarity transfers in risk adjustment (RA). Co... more In Switzerland, age is the predominant driver of solidarity transfers in risk adjustment (RA). Concerns have been voiced regarding growing imbalances in cost sharing between young and old insured due to demographic changes (larger fraction of elderly &amp;amp;amp;amp;gt;65 years and rise in average age). Particularly young adults aged 19-25 with limited incomes have to shoulder increasing solidarity burdens. Between 1996 and 2011, monthly intergenerational solidarity payments for young adults have doubled from CHF 87 to CHF 182, which corresponds to the highest absolute transfer increase of all age groups. By constructing models for age-specific RA growth and for calculating the lifetime sum of RA transfers we investigated the causes and consequences of demographic changes on RA payments. The models suggest that the main driver for RA increases in the past was below average health care expenditure (HCE) growth in young adults, which was only half as high (average 2% per year) compared with older adults (average 4% per year). Shifts in age group distributions were only accountable for 2% of the CHF 95 rise in RA payments. Despite rising risk adjustment debts for young insured the balance of lifetime transfers remains positive as long as HCE growth rates are greater than the discount rate used in this model (3%). Moreover, the life-cycle model predicts that the lifetime rate of return on RA payments may even be further increased by demographic changes. Nevertheless, continued growth of RA contributions may overwhelm vulnerable age groups such as young adults. We therefore propose methods to limit the burden of social health insurance for specific age groups (e.g. young adults in Switzerland) by capping solidarity payments. Taken together, our mathematical modelling framework helps to gain a better understanding of how demographic changes interact with risk adjustment and how redistribution of funds between age groups can be controlled without inducing further selection incentives. Those methods can help to construct more equitable systems of health financing in light of population aging.

The European journal of health economics : HEPAC : health economics in prevention and care, Jan 8, 2015

Community rating in social health insurance calls for risk adjustment in order to eliminate incen... more Community rating in social health insurance calls for risk adjustment in order to eliminate incentives for risk selection. Swiss risk adjustment is known to be insufficient, and substantial risk selection incentives remain. This study develops five indicators to monitor residual risk selection. Three indicators target activities of conglomerates of insurers (with the same ownership), which steer enrollees into specific carriers based on applicants' risk profiles. As a proxy for their market power, those indicators estimate the amount of premium-, health care cost-, and risk-adjustment transfer variability that is attributable to conglomerates. Two additional indicators, derived from linear regression, describe the amount of residual cost differences between insurers that are not covered by risk adjustment. All indicators measuring conglomerate-based risk selection activities showed increases between 1996 and 2009, paralleling the establishment of new conglomerates. At their maxi...

Developments in health economics and public policy, 1998

Policymakers fear that health insurers when exposed to competition will engage in cream-skimming ... more Policymakers fear that health insurers when exposed to competition will engage in cream-skimming (i.e. selection of good risks) rather than trying to improve their benefit to premium ratio. This fear surfaced also when Swiss federal government proposed pro-competitive Law on social health insurance, which barely passed a popular referendum in 1994. While a risk equalization mechanism based on age, gender, and place of residence has already been created, there is a considerable interest in improving its formula. This paper shows that a dummy variable indicating an individual's death during the period of observation causes the coefficient of determination to jump from 0.039 to 0.111. More-over, simulations of the risk selection process suggest that risk equalization should be made a permanent institution rather than being limited to a life of 10 years as prescribed by present legislation. In fact, the formula in use, with all its shortcomings, can be shown to neutralize to a great...

SSRN Electronic Journal, 2000

The main objective ofrisk adjustment in systems ofregulated competition on healthinsurance market... more The main objective ofrisk adjustment in systems ofregulated competition on healthinsurance markets is the removal ofincentives f or undesirable risk selection.W e introduce a simple conceptual f ramework to clarif y how the definition of"acceptable costs"and the distinction between legitimate and illegitimate risk adjusters imply di cult ethical trade-o s between equity, avoidance ofundesirable risk selection and cost-e ectiveness. Focusing on the situation in Belgium, Germany, I srael, the Netherlands and Switzerland, we show how di erences in the importance attached to solidarity and in the belief s about market e ciency, have led to di erent decisions with respect to the definition ofthe basic benefits package, the choice ofrisk-adjusters, the possibilities ofmanaged care, the degree of consumer choice and the relative importance ofincome-related financing sources in the overall system.

Journal of Health Economics, 2010

This paper seeks to create new insights when judging the impact different risk adjustment schemes... more This paper seeks to create new insights when judging the impact different risk adjustment schemes may have on the incentive to select risks. It distinguishes risk types with high and low profit potential and estimates long-run profits associated with risk selection in four scenarios (no risk adjustment, demographic only, including prior hospitalization, and including prior hospitalization and Pharmaceutical Cost Groups). The database covers 180,000 Swiss individuals over 8 years, 3 of which are used for model building and 5, to estimate insurers' profits due to risk selection in the four scenarios. While these profits prove to be very high without risk adjustment and still substantial with demographic risk adjustment, they become surprisingly low when the crude morbidity indicator 'prior hospitalization' is included in the formula. These results clearly indicate the need for health status-related risk adjustment in insurance markets with community rating, taking into account insurers' planning horizon.

Journal of Health Economics, 2012

Microeconomic theory predicts that if patients are fully insured and providers are paid fee-for-s... more Microeconomic theory predicts that if patients are fully insured and providers are paid fee-for-service, utilization of medical services exceeds the efficient level ('moral hazard effect'). In Switzerland, both demand-side cost sharing and supply-side cost sharing have been introduced to mitigate this problem. Analyzing a panel dataset of about 150,000 adults, we find both types of cost sharing to be effective in curtailing the use of medical services. However, demand-side cost sharing options are preliminarily chosen by individuals in excellent health, causing 'true' cost savings achieved by supply-side cost sharing to be more important.

Health Policy, 2007

In this paper we analyse the developments concerning risk adjustment and risk selection in Belgium,

Health Policy, 2003

In Switzerland the new law on Health Insurance, effective since 1996, introduced pro competitive ... more In Switzerland the new law on Health Insurance, effective since 1996, introduced pro competitive changes in the market of sickness funds. The legislator expected high mobility between sickness funds of both healthy and sick insured as open enrolment was introduced with the new law. That is why the risk adjustment scheme, that was already introduced 1993, was limited until 2005. However, consumer mobility remained low and risk selection strategies are still profitable, since risk-adjustment is based only on demographic variables. This paper describes risk adjustment, consumer mobility, risk selection activities of sickness funds and the impact of imperfect risk adjustment on the development of HMO and PPO models. The paper concludes with a description of the current political and scientific discussion in Switzerland.

Health Policy, 2013

From the mid-1990s several countries have introduced elements of regulated competition in healthc... more From the mid-1990s several countries have introduced elements of regulated competition in healthcare. The aim of this paper is to identify the most important preconditions for achieving efficiency and affordability under regulated competition in healthcare, and to indicate to what extent these preconditions are fulfilled in Belgium, Germany, Israel, the Netherlands and Switzerland. These experiences can be worthwhile for other countries (considering) implementing regulated competition (e.g. Australia, Czech Republic, Ireland, Russia, Slovakia, US). We identify and discuss ten preconditions derived from the theoretical model of regulated competition and assess the extent to which each of these preconditions is fulfilled in Belgium, Germany, Israel, the Netherlands and Switzerland. After more than a decade of healthcare reforms in none of these countries all preconditions are completely fulfilled. The following preconditions are least fulfilled: consumer information and transparency, contestable markets, freedom to contract and integrate, and competition regulation. The extent to which the preconditions are fulfilled differs substantially across the five countries. Despite substantial progress in the last years in improving the risk equalization systems, insurers are still confronted with substantial incentives for risk selection, in particular in Israel and Switzerland. Imperfect risk adjustment implies that governments are faced with a complex tradeoff between efficiency, affordability and selection. Implementing regulated competition in healthcare is complex, given the preconditions that have to be fulfilled. Moreover, since not all preconditions can be fulfilled simultaneously, tradeoffs have to be made with implications for the levels of efficiency and affordability that can be achieved. Therefore the optimal set of preconditions is not only an empirical question but ultimately also a matter of societal preferences.

Health Economics, Policy and Law, 2007

As the share of supplementary health insurance (SI) in health care finance is likely to grow, SI ... more As the share of supplementary health insurance (SI) in health care finance is likely to grow, SI may become an increasingly attractive tool for riskselection in basic health insurance (BI). In this paper, we develop a conceptual framework to assess the probability that insurers will use SI for favourable riskselection in BI. We apply our framework to five countries in which risk-selection via SI is feasible: Belgium, Germany, Israel, the Netherlands, and Switzerland. For each country, we review the available evidence of SI being used as selection device. We find that the probability that SI is and will be used for risk-selection substantially varies across countries. Finally, we discuss several strategies for policy makers to reduce the chance that SI will be used for risk-selection in BI markets.

The Geneva Papers on Risk and Insurance Issues and Practice, 2010

An important goal of risk-adjusted capitation payments (RACPs) to competitive communityrated heal... more An important goal of risk-adjusted capitation payments (RACPs) to competitive communityrated health plans-that may differ in coverage and/or the organisation of delivering careis to reduce incentives for risk selection while maintaining incentives for efficiency. In most schemes, RACPs are simply based on the average observed costs in risk groups (in a prior year). We show that under this procedure, incentives for efficiency will not always be maintained: when identical risk types are concentrated in the same health plans-due to selection, specialisation or just coincidence-cost savings can be captured by the RACPs and leak away from these plans. money for each enrollee on their list, adjusted for risk characteristics such as age, gender and health status. 2 Given the requirement of community-rating, the goal of RACPs is to reduce incentives for risk selection while maintaining incentives for efficiency in production. 3 As defined by Newhouse, 4 "risk selection" includes actions of consumers and health plans to exploit unpriced risk heterogeneity and break pooling arrangements, and efficiency in production" (further: efficiency) means choosing the least costly treatment for a patient's medical problem, holding quality constant.