Designing feasible and effective health plan payments in countries with data availability constraints
Designing feasible and effective health plan payments in countries with data availability constraints
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.
Henriquez, Josefa
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Iommi, Marica
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Mcguire, Thomas
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Mentzakis, Emmanouil
c0922185-18c7-49c2-a659-8ee6d89b5d74
Paolucci, Francesco
073b630d-7adc-41ee-b198-6b33bcacce6c
20 January 2022
Henriquez, Josefa
79ffd16c-59cc-4f7b-8b81-4f9fdf5f22bf
Iommi, Marica
6d7f4b43-1389-4733-b226-c74340bd32f2
Mcguire, Thomas
f21df5f8-6a8a-4985-b2a1-3e3526d164c1
Mentzakis, Emmanouil
c0922185-18c7-49c2-a659-8ee6d89b5d74
Paolucci, Francesco
073b630d-7adc-41ee-b198-6b33bcacce6c
Henriquez, Josefa, Iommi, Marica, Mcguire, Thomas, Mentzakis, Emmanouil and Paolucci, Francesco
(2022)
Designing feasible and effective health plan payments in countries with data availability constraints.
Journal of Risk and Insurance.
(doi:10.1111/jori.12372).
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.
Text
EMentzakis-JRI
- Accepted Manuscript
More information
Accepted/In Press date: 18 December 2021
e-pub ahead of print date: 20 January 2022
Published date: 20 January 2022
Additional Information:
Publisher Copyright:
© 2022 American Risk and Insurance Association
Identifiers
Local EPrints ID: 454098
URI: http://eprints.soton.ac.uk/id/eprint/454098
ISSN: 0022-4367
PURE UUID: d3d502b4-4042-46d6-9a2d-4e11ad988d46
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Date deposited: 31 Jan 2022 17:36
Last modified: 17 Mar 2024 07:06
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Contributors
Author:
Josefa Henriquez
Author:
Marica Iommi
Author:
Thomas Mcguire
Author:
Francesco Paolucci
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