Study Findings on Health Insurance Are Outlined in Reports from Erasmus University (Can premium differentiation counteract adverse selection in the…

Managed Care Weekly Digest

Study Findings on Health Insurance Are Outlined in Reports from Erasmus University (Can premium differentiation counteract adverse selection in the Dutch supplementary health insurance? A simulation study)

By a News Reporter-Staff News Editor at Managed Care Weekly Digest -- Research findings on Health Insurance are discussed in a new report. According to news reporting originating in Rotterdam, Netherlands, by NewsRx journalists, research stated, "Most health insurers in the Netherlands apply community-rating and open enrolment for supplementary health insurance, although it is offered at a free market. Theoretically, this should result in adverse selection."

The news reporters obtained a quote from the research from Erasmus University, "There are four indications that adverse selection indeed has started to occur on the Dutch supplementary insurance market. The goal of this paper is to analyze whether premium differentiation would be able to counteract adverse selection. We do this by simulating the uptake and premium development of supplementary insurance over 25 years using data on healthcare expenses and background characteristics from 110,261 insured. For the simulation of adverse selection, it is assumed that only insured for whom supplementary insurance is expected not to be beneficial will consider opting out of the insurance. Therefore, we calculate for each insured the financial profitability (by making assumptions about the consumer's expected claims and the premium set by the insurer), the individual's risk attitude and the probability to opt out or opt in. The simulation results show that adverse selection might result in a substantial decline in insurance uptake. Additionally, the simulations show that if insurers were to differentiate their premium to 28 age and gender groups, adverse selection could be modestly counteracted."

According to the news reporters, the research concluded: "Finally, this paper shows that if insurers would apply highly refined risk-rating, adverse selection for this type of supplementary insurance could be counteracted completely."

For more information on this research see: Can premium differentiation counteract adverse selection in the Dutch supplementary health insurance? A simulation study. European Journal of Health Economics, 2018;19(5):757-768. European Journal of Health Economics can be contacted at: Springer, 233 Spring St, New York, NY 10013, USA. (Springer - www.springer.com; European Journal of Health Economics - www.springerlink.com/content/1618-7598/)

Our news correspondents report that additional information may be obtained by contacting K.P.M. van Winssen, Erasmus University, Inst Hlth Policy & Management, NL-3062 PA Rotterdam, Netherlands. Additional authors for this research include R.C. van Kleef and W. van de Ven (see also Health Insurance).

The direct object identifier (DOI) for that additional information is: https://doi.org/10.1007/s10198-017-0918-2. 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.

Keywords for this news article include: Rotterdam, Netherlands, Europe, Risk and Prevention, Health and Medicine, Health Insurance, Erasmus University.