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Contribution Details

Type Working Paper
Scope Discipline-based scholarship
Title Acceptable costs and risk adjustment : policy choices and ethical trade-offs
Organization Unit
  • Erik Schokkaert
  • Konstantin Beck
  • Amir Shmueli
  • Wynand P M M van de Ven
  • Carine Van de Voorde
  • Juergen Wasem
  • English
Institution University of Zurich
Series Name Discussions Paper Series (DPS) / Center for Economic Studies, KU Leuven
Number 06.19
Number of Pages 33
Date 2006
Abstract Text 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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