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Acceptable costs and risk adjustment : policy choices and ethical trade-offs


Schokkaert, Erik; Beck, Konstantin; Shmueli, Amir; van de Ven, Wynand P M M; Van de Voorde, Carine; Wasem, Juergen (2006). Acceptable costs and risk adjustment : policy choices and ethical trade-offs. Discussions Paper Series (DPS) / Center for Economic Studies, KU Leuven 06.19, University of Zurich.

Abstract

The main objective of risk adjustment in systems of regulated competition on healthinsurance 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 diffcult 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 effciency, 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.

Abstract

The main objective of risk adjustment in systems of regulated competition on healthinsurance 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 diffcult 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 effciency, 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.

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Additional indexing

Item Type:Working Paper
Communities & Collections:03 Faculty of Economics > Department of Economics
Dewey Decimal Classification:330 Economics
Language:English
Date:November 2006
Deposited On:15 Jun 2016 15:04
Last Modified:08 Dec 2017 19:42
Series Name:Discussions Paper Series (DPS) / Center for Economic Studies, KU Leuven
Number of Pages:33
Related URLs:http://feb.kuleuven.be/research/leuven/Economics/@discussion-paper-series

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