IDEAS home Printed from https://ideas.repec.org/p/esr/wpaper/rb20170207.html
   My bibliography  Save this paper

Addressing market segmentation and incentives for risk selection: How well does risk equalisation in the Irish private health insurance market work?

Author

Listed:
  • Keegan, Conor
  • Teljeur, Conor
  • Turner, Brian
  • Thomas, Steve

Abstract

This study assesses the efficacy of Ireland’s recently introduced risk equalisation scheme in its voluntary health insurance market. Robust risk equalisation is especially important in an Irish context given acute risk segmentation and incentives for risk selection that have evolved within the market. Using uniquely acquired VHI data (N=1,235,922) this analysis assesses the predictive efficacy of both current and alternative risk equalisation specifications. Results suggest that the low predictive power of the current risk equalisation design (R2 = 6.8 per cent) is not appropriately correcting for anti-competitive incentives and asymmetries in the market. Improvements to the current design could be achieved through the introduction of diagnosis-based risk adjusters.
(This abstract was borrowed from another version of this item.)

Suggested Citation

  • Keegan, Conor & Teljeur, Conor & Turner, Brian & Thomas, Steve, 2017. "Addressing market segmentation and incentives for risk selection: How well does risk equalisation in the Irish private health insurance market work?," Papers RB20170207, Economic and Social Research Institute (ESRI).
    • Handle: RePEc:esr:wpaper:rb20170207
    as

    Download full text from publisher

    File URL: https://www.esri.ie/pubs/RB20170207.pdf
    Download Restriction: no
    ---><---

    Other versions of this item:

    References listed on IDEAS

    as
    1. Duijmelinck, Daniëlle M.I.D. & Mosca, Ilaria & van de Ven, Wynand P.M.M., 2015. "Switching benefits and costs in competitive health insurance markets: A conceptual framework and empirical evidence from the Netherlands," Health Policy, Elsevier, vol. 119(5), pages 664-671.
    2. Buchner, Florian & Goepffarth, Dirk & Wasem, Juergen, 2013. "The new risk adjustment formula in Germany: Implementation and first experiences," Health Policy, Elsevier, vol. 109(3), pages 253-262.
    3. Smith, Samantha & Normand, Charles, 2009. "Analysing equity in health care financing: A flow of funds approach," Social Science & Medicine, Elsevier, vol. 69(3), pages 379-386, August.
    4. Breyer, Friedrich & Bundorf, M. Kate & Pauly, Mark V., 2011. "Health Care Spending Risk, Health Insurance, and Payment to Health Plans," Handbook of Health Economics, in: Mark V. Pauly & Thomas G. Mcguire & Pedro P. Barros (ed.), Handbook of Health Economics, volume 2, chapter 0, pages 691-762, Elsevier.
    5. Turner, Brian & Shinnick, Edward, 2013. "Community rating in the absence of risk equalisation: lessons from the Irish private health insurance market," Health Economics, Policy and Law, Cambridge University Press, vol. 8(2), pages 209-224, April.
    6. Francesca Colombo & Nicole Tapay, 2004. "Private Health Insurance in Ireland: A Case Study," OECD Health Working Papers 10, OECD Publishing.
    7. Brian Nolan, 2006. "The Interaction of Public and Private Health Insurance: Ireland as a Case Study," The Geneva Papers on Risk and Insurance - Issues and Practice, Palgrave Macmillan;The Geneva Association, vol. 31(4), pages 633-649, October.
    8. S. Veen & R. Kleef & W. Ven & R. Vliet, 2015. "Improving the prediction model used in risk equalization: cost and diagnostic information from multiple prior years," The European Journal of Health Economics, Springer;Deutsche Gesellschaft für Gesundheitsökonomie (DGGÖ), vol. 16(2), pages 201-218, March.
    9. Bevan, Gwyn & van de Ven, Wynand P. M. M., 2010. "Choice of providers and mutual healthcare purchasers: can the English National Health Service learn from the Dutch reforms?1," Health Economics, Policy and Law, Cambridge University Press, vol. 5(3), pages 343-363, July.
    10. Armstrong, John, 2010. "Risk equalisation and voluntary health insurance markets: The case of Ireland," Health Policy, Elsevier, vol. 98(1), pages 15-26, November.
    11. Armstrong, John & Paolucci, Francesco & van de Ven, Wynand P.M.M., 2010. "Risk equalisation in voluntary health insurance markets," Health Policy, Elsevier, vol. 98(1), pages 1-2, November.
    12. Van de ven, Wynand P.M.M. & Ellis, Randall P., 2000. "Risk adjustment in competitive health plan markets," Handbook of Health Economics, in: A. J. Culyer & J. P. Newhouse (ed.), Handbook of Health Economics, edition 1, volume 1, chapter 14, pages 755-845, Elsevier.
    13. Turner, Brian, 2015. "Unwinding the State subsidisation of private health insurance in Ireland," Health Policy, Elsevier, vol. 119(10), pages 1349-1357.
    14. Van de Ven, Wynand P. M. M., 2011. "Risk adjustment and risk equalization: what needs to be done?," Health Economics, Policy and Law, Cambridge University Press, vol. 6(01), pages 147-156, January.
    15. Corinne Behrend & Florian Buchner & Michael Happich & Rolf Holle & Peter Reitmeir & Jürgen Wasem, 2007. "Risk-adjusted capitation payments: how well do principal inpatient diagnosis-based models work in the German situation? Results from a large data set," The European Journal of Health Economics, Springer;Deutsche Gesellschaft für Gesundheitsökonomie (DGGÖ), vol. 8(1), pages 31-39, March.
    16. Wren, Maev-Ann & Connolly, Sheelagh & Cunningham, Nathan, 2015. "An Examination of the Potential Costs of Universal Health Insurance in Ireland," Research Series, Economic and Social Research Institute (ESRI), number RS45.
    17. Kiil, Astrid, 2012. "What characterises the privately insured in universal health care systems? A review of the empirical evidence," Health Policy, Elsevier, vol. 106(1), pages 60-75.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Conor Keegan & Conor Teljeur & Brian Turner & Steve Thomas, 2019. "Switching benefits and costs in the Irish health insurance market: an analysis of consumer surveys," International Journal of Health Economics and Management, Springer, vol. 19(1), pages 15-32, March.
    2. Keegan, Conor, 2020. "The introduction of lifetime community rating in the Irish private health insurance market: Effects on coverage and plan choice," Social Science & Medicine, Elsevier, vol. 255(C).

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Conor Keegan & Conor Teljeur & Brian Turner & Steve Thomas, 2019. "Switching benefits and costs in the Irish health insurance market: an analysis of consumer surveys," International Journal of Health Economics and Management, Springer, vol. 19(1), pages 15-32, March.
    2. Schmid, Christian P.R. & Beck, Konstantin, 2016. "Re-insurance in the Swiss health insurance market: Fit, power, and balance," Health Policy, Elsevier, vol. 120(7), pages 848-855.
    3. Kanika Kapur, 2020. "Private Health Insurance in Ireland: Trends and Determinants," The Economic and Social Review, Economic and Social Studies, vol. 51(1), pages 63-92.
    4. Pilny, Adam & Wübker, Ansgar & Ziebarth, Nicolas R., 2017. "Introducing risk adjustment and free health plan choice in employer-based health insurance: Evidence from Germany," Journal of Health Economics, Elsevier, vol. 56(C), pages 330-351.
    5. Michiel Bijlsma & Jan Boone & Gijsbert Zwart, 2014. "Competition leverage: how the demand side affects optimal risk adjustment," RAND Journal of Economics, RAND Corporation, vol. 45(4), pages 792-815, December.
    6. Xu, Weiwei & van de Ven, Wynand P.M.M., 2013. "Consumer choice among Mutual Healthcare Purchasers: A feasible option for China?," Social Science & Medicine, Elsevier, vol. 96(C), pages 277-284.
    7. Withagen-Koster, Anja A. & van Kleef, Richard C. & Eijkenaar, Frank, 2023. "Predictable profits and losses in a health insurance market with risk equalization: A multiple-contract period perspective," Health Policy, Elsevier, vol. 131(C).
    8. Camilo Cid & Randall P. Ellis & Verónica Vargas & Juergen Wasem & Lorena Prieto, 2015. "Global Risk-Adjusted Payment Models," Boston University - Department of Economics - Working Papers Series wp2015-021, Boston University - Department of Economics.
    9. Thomson, Sarah & Busse, Reinhard & Crivelli, Luca & van de Ven, Wynand & Van de Voorde, Carine, 2013. "Statutory health insurance competition in Europe: A four-country comparison," Health Policy, Elsevier, vol. 109(3), pages 209-225.
    10. Michele Fioretti & Hongming Wang, 2023. "Performance Pay in Insurance Markets: Evidence from Medicare," The Review of Economics and Statistics, MIT Press, vol. 105(5), pages 1128-1144, September.
    11. Timothy J. Layton & Randall P. Ellis & Thomas G. McGuire, 2015. "Assessing Incentives for Adverse Selection in Health Plan Payment Systems," Boston University - Department of Economics - Working Papers Series wp2015-024, Boston University - Department of Economics.
    12. Wasem, Jürgen & Buchner, Florian & Lux, Gerald & Schillo, Sonja, 2017. "High Cost Pool in a Health Status Based Risk Adjustment System – Some Conceptional and Empirical Considerations," VfS Annual Conference 2017 (Vienna): Alternative Structures for Money and Banking 168122, Verein für Socialpolitik / German Economic Association.
    13. Geruso, Michael & McGuire, Thomas G., 2016. "Tradeoffs in the design of health plan payment systems: Fit, power and balance," Journal of Health Economics, Elsevier, vol. 47(C), pages 1-19.
    14. repec:spo:wpecon:info:hdl:2441/2ioennpq5m90holakkatq7cmms is not listed on IDEAS
    15. repec:spo:wpmain:info:hdl:2441/3ihldo33ik9ee94procjtfki5f is not listed on IDEAS
    16. S. H. C. M. van Veen & R. C. van Kleef & W. P. M. M. van de Ven & R. C. J. A. van Vliet, 2018. "Exploring the predictive power of interaction terms in a sophisticated risk equalization model using regression trees," Health Economics, John Wiley & Sons, Ltd., vol. 27(2), pages 1-12, February.
    17. Samantha Smith, 2010. "The Irish ‘health basket’: a basket case?," The European Journal of Health Economics, Springer;Deutsche Gesellschaft für Gesundheitsökonomie (DGGÖ), vol. 11(3), pages 343-350, June.
    18. Eijkenaar, Frank & van Vliet, René C.J.A., 2017. "Improving risk equalization for individuals with persistently high costs: Experiences from the Netherlands," Health Policy, Elsevier, vol. 121(11), pages 1169-1176.
    19. Normann Lorenz, 2017. "Using Quantile and Asymmetric Least Squares Regression for Optimal Risk Adjustment," Health Economics, John Wiley & Sons, Ltd., vol. 26(6), pages 724-742, June.
    20. Mark Stabile & Sarah Thomson, 2014. "The Changing Role of Government in Financing Health Care: An International Perspective," Journal of Economic Literature, American Economic Association, vol. 52(2), pages 480-518, June.
    21. Mark Shepard, 2016. "Hospital Network Competition and Adverse Selection: Evidence from the Massachusetts Health Insurance Exchange," NBER Working Papers 22600, National Bureau of Economic Research, Inc.
    22. Panos Kanavos & Olivier Wouters & Olivier J. Wouters & Martin McKee, 2017. "Private Financing of Health Care in Times of Economic Crisis: a Review of the Evidence," Global Policy, London School of Economics and Political Science, vol. 8, pages 23-29, March.

    More about this item

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:esr:wpaper:rb20170207. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Sarah Burns (email available below). General contact details of provider: https://edirc.repec.org/data/esriiie.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.