Risk equalization and voluntary deductibles: a complex interaction

Journal of Health Economics
R C van KleefR C van Vliet

Abstract

The presence of voluntary deductibles in the Swiss and Dutch mandatory health insurance has important implications for the respective risk equalization systems. In a theoretical analysis, we discuss the consequences of equalizing three types of expenditures: the net claims that are reimbursed by the insurer, the out-of-pocket expenditures and the expenditure savings due to moral hazard reduction. Equalizing only the net claims, as done in Switzerland, creates incentives for cream skimming and prevents insurers from incorporating out-of-pocket expenditures and moral hazard reductions into their premium structure. In an empirical analysis, we examine the effect of self-selection and conclude that the Swiss and Dutch risk equalization systems do not fully adjust for differences in health status between those who choose a deductible and those who do not. We discuss how this may lead to incentives for cream skimming and to a reduction of cross-subsidies from healthy to unhealthy individuals compared to a situation without voluntary deductibles.

References

Jul 27, 2001·Journal of Health Economics·W G Manning, J Mullahy
Jun 24, 2003·Health Policy·Konstantin BeckLucien Gardiol
Oct 7, 2004·International Journal of Health Care Finance and Economics·René C J A van Vliet

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Citations

May 23, 2002·Journal of Health Economics·Yujing Shen, Randall P Ellis
Dec 12, 2002·Journal of Health Economics·Frederik T Schut, Wolter H J Hassink
Sep 28, 2002·Journal of Health Economics·Mathias Kifmann
Feb 24, 2011·Health Economics, Policy, and Law·Wynand P M M Van de Ven
Nov 14, 2013·Expert Review of Pharmacoeconomics & Outcomes Research·Richard C van KleefRené C J A van Vliet
Feb 10, 2016·The European Journal of Health Economics : HEPAC : Health Economics in Prevention and Care·K P M van WinssenW P M M van de Ven
Nov 23, 2011·Journal of Health Economics·Maria TrottmannKonstantin Beck
Jul 27, 2010·Health Policy·John ArmstrongWynand P M M van de Ven
Aug 20, 2015·The International Journal of Health Planning and Management·Limei JingYuehong Zhuang
Oct 1, 2015·The European Journal of Health Economics : HEPAC : Health Economics in Prevention and Care·R C van KleefW P M M van de Ven
Aug 1, 2020·Health Economics·Rob J M AlessieLaura Viluma
Aug 1, 2021·The European Journal of Health Economics : HEPAC : Health Economics in Prevention and Care·Laura AnselmiStephen Lorrimer

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