Erasmus University Medical Center Reports Findings in Healthcare Economics (The goal of risk equalization in regulated competitive health insurance markets): Economics – Healthcare Economics

2022 APR 11 (NewsRx) -- By a News Reporter-Staff News Editor at Insurance Daily News -- New research on Economics - Healthcare Economics is the subject of a report. According to news originating from Rotterdam, Netherlands, by NewsRx correspondents, research stated, “Different opinions exist about the goal of risk equalization in regulated competitive health insurance markets. There seems to be consensus that an element of the goal of risk equalization is ‘to remove the predictable over- and undercompensations of subgroups of insured’ or, equivalently, ‘to achieve a level playing field for each risk composition of an insurer’s portfolio’ or, equivalently, ‘to remove the incentives for risk selection’.”

Our news journalists obtained a quote from the research from Erasmus University Medical Center, “However, the role of efficiency appears to be a major issue: should efficiency also be an element of the goal of risk equalization, or should it be a restriction to the goal, or should efficiency not be an element of the goal or a restriction to the goal? If efficiency plays a role, a comprehensive analysis of the total effect of risk equalization on efficiency needs to be done. An improvement of the performance of a risk equalization scheme has both negative and positive effects on efficiency. Negative effects include the reduction in efficiency via cost- or utilization-based risk adjusters. Positive effects result from leveling the playing field and reducing the incentives for risk selection, which increase efficiency as the outcome of a competitive market. In practice many regulators and policy makers take efficiency into consideration by looking at the negative effects, but hardly at the positive effects. The definition of the goal of risk equalization has consequences for the design and evaluation of risk equalization schemes and for the equalization payments.”

According to the news editors, the research concluded: “We describe relevant potential goals, tradeoffs and possible solutions.”

This research has been peer-reviewed.

For more information on this research see: The goal of risk equalization in regulated competitive health insurance markets. The European Journal of Health Economics, 2022. The European Journal of Health Economics can be contacted at: Springer, One New York Plaza, Suite 4600, New York, Ny, United States.

The news correspondents report that additional information may be obtained from Wynand van de Ven, Erasmus University Medical Center, Rotterdam, Netherlands. Additional authors for this research include Gerrit Hamstra, Richard van Kleef, Mieke Reuser and Piet Stam.

The direct object identifier (DOI) for that additional information is: https://doi.org/10.1007/s10198-022-01457-7. This DOI is a link to an online electronic document that is either free or for purchase, and can be your direct source for a journal article and its citation.

The publisher’s contact information for the The European Journal of Health Economics is: Springer, One New York Plaza, Suite 4600, New York, Ny, United States.

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