Capping risk adjustment?
When premiums are community-rated, risk adjustment (RA) serves to mitigate competitive insurers' incentive to select favorable risks. However, unless fully prospective, it also undermines their incentives for efficiency. By capping its volume, one may try to counteract this tendency, exposing insurers to some financial risk. This in term runs counter the quest to refine the RA formula, which would increase RA volume. Specifically, the adjuster, "Hospitalization or living in a nursing home during the previous year" will be added in Switzerland starting 2012. This paper investigates how to minimize the opportunity cost of capping RA in terms of increased incentives for risk selection.
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- Peter Zweifel & Harry Telser & Stephan Vaterlaus, 2006. "Consumer Resistance Against Regulation: The Case of Health Care," Journal of Regulatory Economics, Springer, vol. 29(3), pages 319-332, 05.
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- Zweifel, Peter & Breuer, Michael, 2006. "The case for risk-based premiums in public health insurance," Health Economics, Policy and Law, Cambridge University Press, vol. 1(02), pages 171-188, April.
- van Barneveld, Erik M. & Lamers, Leida M. & van Vliet, Rene C. J. A. & van de Ven, Wynand P. M. M., 2001. "Risk sharing as a supplement to imperfect capitation: a tradeoff between selection and efficiency," Journal of Health Economics, Elsevier, vol. 20(2), pages 147-168, March.
- Zweifel, Peter, 2007. "The Theory of Social Health Insurance," Foundations and Trends(R) in Microeconomics, now publishers, vol. 3(3), pages 183-273, May.
- Steinmann Lukas & Telser Harry & Zweifel Peter S., 2007. "Aging and Future Healthcare Expenditure: A Consistent Approach," Forum for Health Economics & Policy, De Gruyter, vol. 10(2), pages 1-28, March.
- Lehmann, Hansjorg & Zweifel, Peter, 2004. "Innovation and risk selection in deregulated social health insurance," Journal of Health Economics, Elsevier, vol. 23(5), pages 997-1012, September.
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