Acceptable Costs and Risk Adjustment: Policy Choices and Ethical Trade-Offs

37 Pages Posted: 13 Jan 2007

See all articles by Erik Schokkaert

Erik Schokkaert

Catholic University of Leuven (KUL)

Konstantin Beck

University of Zurich and CSS Insurance, Lucerne

A. Shmueli

Hebrew University of Jerusalem

Wynand P.M.M. van de Ven

Erasmus University Rotterdam (EUR)

Carine Van de Voorde

Catholic University of Leuven (KULeuven)

Jürgen Wasem

University of Duisburg-Essen

Abstract

The main objective of risk adjustment in systems of regulated competition on health insurance markets is the removal of incentives for undesirable risk selection. We introduce a simple conceptual framework to clarify how the definition of acceptable costs and the distinction between legitimate and illegitimate risk adjusters imply difficult ethical trade-offs between equity, avoidance of undesirable risk selection and cost-effectiveness. Focusing on the situation in Belgium, Germany, Israel, the Netherlands and Switzerland, we show how differences in the importance attached to solidarity and in the beliefs about market efficiency, have led to different decisions with respect to the definition of the basic benefits package, the choice of risk-adjusters, the possibilities of managed care, the degree of consumer choice and the relative importance of income-related financing sources in the overall system

Suggested Citation

Schokkaert, Erik and Beck, Konstantin and Shmueli, A. and van de Ven, Wynand and Van de Voorde, Carine and Wasem, Jürgen, Acceptable Costs and Risk Adjustment: Policy Choices and Ethical Trade-Offs. Available at SSRN: https://ssrn.com/abstract=955804 or http://dx.doi.org/10.2139/ssrn.955804

Erik Schokkaert (Contact Author)

Catholic University of Leuven (KUL) ( email )

Oude Markt 13
Leuven, Vlaams-Brabant 3000
Belgium

Konstantin Beck

University of Zurich and CSS Insurance, Lucerne ( email )

Rämistrasse 71
Zürich, CH-8006
Switzerland

A. Shmueli

Hebrew University of Jerusalem ( email )

School of Public Health
Jerusalem 91905
Israel
+972 2 6758514 (Phone)
+972 2 6435083 (Fax)

Wynand Van de Ven

Erasmus University Rotterdam (EUR) ( email )

Netherlands
+ 31 10 4088556 (Phone)

Carine Van de Voorde

Catholic University of Leuven (KULeuven) ( email )

Naamsestraat 69
B-3000 Leuven, 3000
Belgium

Jürgen Wasem

University of Duisburg-Essen ( email )

Lotharstrasse 1
Duisburg, 47048
Germany

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