 Designing feasible and effective health plan payments in countries with data availability constraintsJosefa Henriquez, Marica Iommi, Thomas McGuire, Emmanouil Mentzakis and Francesco Paolucci Journal of Risk & Insurance, 2023, vol. 90, issue 1, 33-57 Abstract: Risk equalization schemes, which transfer money to/from insurers that have above/below average risks, are a fundamental tool in regulated health insurance markets in many countries. Risk sharing (the transfer of some responsibility for costs from a plan to the regulator or the overall insurance market), are an additional method of insulating insurers who attract higher‐than‐average risks. This paper proposes, implements and quantifies incorporating risk sharing within a risk equalization scheme that can be applied in a data‐poor context. Using Chile's private health insurance market as case study, we show that modest amount of risk sharing greatly improves fit even in simple demographic‐based risk equalization. Expanding the model's formula to include morbidity‐based adjustors and risk sharing redirects compensations at insurer level and reduces opportunity to engage in profitable risk selection at the group level. Our emphasis on feasibility may make alternatives proposed attractive to countries facing data‐availability constraints. Date: 2023 Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:bla:jrinsu:v:90:y:2023:i:1:p:33-57 Ordering information: This journal article can be ordered from Access Statistics for this article Journal of Risk & Insurance is currently edited by Joan T. Schmit More articles in Journal of Risk & Insurance from The American Risk and Insurance Association Contact information at EDIRC. |
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