Determinants of health care utilization by German sickness fund members - with application to risk adjustment (original) (raw)
Related papers
Incomplete risk adjustment and adverse selection in the German public health insurance system
2002
The German statutory health insurance market was exposed to competition in 1996. To avoid adverse selection, a prospective risk compensation scheme was introduced in 1994. Due to their low contribution rates, company-based sickness funds were able to attract a lot of new members. We analyze -using data from the German Socio-Economic Panel -the determinants of these transitions from 1995 to 2000. By estimating a simultaneous two equation system, we find that health status positively, and significantly, affects the probability of changing to a company-based sickness fund, especially after controlling for age. Thus the risk compensation scheme does not fully control for the health status of the changers. Consequently, the comparative advantages of company-based funds will increase over time. This observation provides evidence for the standard Rothschild-Stiglitz separating equilibrium.
Risk structure compensation in Germany's statutory health insurance
The European Journal of Public Health, 2001
In 1996 insurees in Germany's statutory health insurance system were given a right to choose their sickness fund. To ensure that all funds had an equal starting position, a risk structure compensation scheme based on income and average expenditure by age and sex was introduced. From an analysis of expenditure and transfers, data on sickness fund membership and a published survey, the following effects can be identified: sickness funds merged, with a reduction in number from 1,221 to 420 between 1993 and 2000; the risk compensation scheme narrowed differences in contribution rates; insurees left the more expensive funds for cheaper ones; and increasing transfer sums indicate further risk segregation. Thus, the compensation mechanism will have to be retained permanently, although modifications are likely.
Risk adjustment and risk selection on the sickness fund insurance market in five European countries
Health Policy, 2003
From the mid-1990s citizens in Belgium, Germany, Israel, the Netherlands and Switzerland have a guaranteed periodic choice among risk-bearing sickness funds, who are responsible for purchasing their care or providing them with medical care. The rationale of this arrangement is to stimulate the sickness funds to improve efficiency in health care production and to respond to consumers' preferences. To achieve solidarity, all five countries have implemented a system of risk-adjusted premium subsidies (or risk equalization across risk groups), along with strict regulation of the consumers' direct premium contribution to their sickness fund. In this article we present a conceptual framework for understanding risk adjustment and comparing the systems in the five countries. We conclude that in the case of imperfect risk adjustment */as is the case in all five countries in the year 2001 */the sickness funds have financial incentives for risk selection, which may threaten solidarity, efficiency, quality of care and consumer satisfaction. We expect that without substantial improvements in the risk adjustment formulae, risk selection will increase in all five countries. The issue is particularly serious in Germany and Switzerland. We strongly recommend therefore that policy makers in the five countries give top priority to the improvement of the system of risk adjustment. That would enhance solidarity, cost-control, efficiency and client satisfaction in a system of competing, risk-bearing sickness funds. # (W.P.M.M. van de Ven). Health Policy 65 (2003) 75 Á/98 www.elsevier.com/locate/healthpol 0168-8510/02/$ -see front matter # 2002 Elsevier Science Ireland Ltd. All rights reserved. PII: S 0 1 6 8 -8 5 1 0 ( 0 2 ) 0 0 1 1 8 -5
Review of Income and Wealth, 2008
We analyzed the redistributive outcomes of sickness benefits using a typology of social insurance institutions, including four different systems, after adjusting for sickness risk factors. The aim is to empirically observe if the expected redistributive pattern of the typology could be verified whether or not considering the variations in sickness risk across the countries. Data on household earnings and sickness benefits in ten countries and for different years were taken from the Luxembourg Income Study. We also used data on labor force demography and educational attainment. Gini coefficients were used for measuring earnings inequality. Relative changes in earnings inequality for sickness benefits were predicted by social insurance institutional dummies using multiple regression analyses. Among the four different schemes, the encompassing system is found to be most redistributive, followed by basic security and targeting systems. The corporatist system has shown no significant difference from the encompassing system in redistributive outcomes.
The new risk adjustment formula in Germany: Implementation and first experiences
Health Policy, 2013
In Germany risk adjustment is a core element of the regulatory framework of competition between sickness funds. It shall create a level playing field between funds with very heterogeneous risk structures. Prior to 2009 risk adjustment was mainly by a demographic model. In 2009 morbidity based risk adjustment was introduced, embedded in a broader reform of the statutory health insurance system. The new formula covers 80 "severe" or "costly and chronic" diseases structured in a system of hierarchical groups.
Risk adjustment in health insurance and its long-term effectiveness
Journal of Health Economics, 2010
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.
Financial incentives in the German Statutory Health Insurance: New findings, new questions
Health Policy, 2010
Objectives: This paper presents findings of a mandatory three-year evaluation of a prevention bonus scheme offered in the German Statutory Health Insurance (SHI). Its objective is to describe the rationale behind the programs, analyze their financial impact and discuss their implications on potentially conflicting goals on solidarity and competition. Methods: The analysis included 70,429 insured enrolled in a prevention bonus program in a cohort study. The intervention group and their matched controls were followed for a three-year period. Matching was performed as nearest neighbor matching. The economic analysis comprised all costs relevant for Sickness Funds (SF) in the SHI and was carried out from a SHI perspective. Differences in cost trends between the intervention and the control group were examined applying the paired t-test. Results: Regarding mean costs there was a significant difference between the two groups of D 177.48 (90% CI [D 149.73; D 205.24]) in favor of the intervention group. If program costs were considered cost reductions of D 100.88 (90% CI [D 73.12; D 128.63]) were obtained. Conclusions: The uptake of a prevention bonus program led to cost reductions in the intervention group compared to the control group even when program costs were considered. However, the results must be interpreted with caution as in addition to financial aspects, socio-economic and health-status, selection bias and the function and use of bonus programs as marketing tools, as well as their long-term sustainability should be considered in future assessments.
Health affairs
The introduction in 1996 of free choice among sickness funds in Germany was accompanied by a "risk structure compensation" (RSC) mechanism based on average spending by age and sex. Because chronically ill people were not adequately taken into account, competition for newly insured consumers concentrated on the healthy. The introduction in 2002 of disease management programs addresses this problem: Insured people in such programs are treated as a separate RSC category, making them a more "attractive" group that no longer generates a deficit. The degree of sickness fund activities and the fierce dispute with physicians are valid indicators that the incentives work.
Risk equalization in The Netherlands: an emperical evaluation
Expert Review of Pharmacoeconomics Outcomes Research, 2013
The Netherlands relies on risk equalization to compensate competing health insurers for predictable variation in individual medical expenses. Without accurate risk equalization insurers are confronted with incentives for risk selection. The goal of this study is to evaluate the improvement in predictive accuracy of the Dutch risk equalization model since its introduction in 1993. Based on individual-level claims data (n = 15.6 million), we estimate the risk equalization models that have been successively applied in The Netherlands since 1993. Using individual-level survey data (n = 8735), we examine the average under-/ overcompensation by these models for several relevant subgroups in the population. We find that in the course of years, the risk equalization model has been substantially improved. Even the current model (2012), however, does not eliminate incentives for risk selection completely. To achieve the public objectives, further improvement of the Dutch risk equalization model is crucial.