Risk Equalisation in Ireland and Australia: A Simulation Analysis to Compare Outcomes
Risk equalisation has been implemented in a number of countries as a means of providing explicit risk-adjusted transfers between health insurance undertakings to improve efficiency within the health insurance market, and make health insurance affordable. Two such countries are Australia and Ireland. In this article, a simulation exercise is carried out to compare the effectiveness of the two countries’ risk equalisation schemes in meeting the policy objectives of encouraging insurers to be efficient and discouraging them from engaging in risk selection. The results of the analysis show that the Australian scheme is less effective than the Irish scheme in reducing the incentive for risk selection and in encouraging insurers to be efficient. The results provide evidence that direct standardisation mechanisms (as used in Ireland) can lead to superior outcomes as compared to indirect standardisation mechanisms (as used in Australia) in terms of promoting efficiency and deterring risk selection.
Volume (Year): 35 (2010)
Issue (Month): 4 (October)
|Contact details of provider:|| Web page: http://www.palgrave-journals.com/|
|Order Information:|| Postal: Palgrave Macmillan Journals, Subscription Department, Houndmills, Basingstoke, Hampshire RG21 6XS, UK|
Web: http://www.palgrave-journals.com/pal/subscribe/index.html Email:
When requesting a correction, please mention this item's handle: RePEc:pal:gpprii:v:35:y:2010:i:4:p:521-538. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Daniel Foley)
If references are entirely missing, you can add them using this form.