Mandatory high-risk pooling: an approach to reducing incentives for cream skimming.
Risk-adjusted capitation payments (RACPs) to competing health insurers are an essential element of market-oriented health care reforms in The Netherlands. Crude RACPs are inadequate, especially because they encourage insurers to select against people expected to be unprofitable--a practice called cream skimming. However, implementing improved RACPs does not appear to be straightforward. This paper analyzes an approach that, given a system of crude RACPs, reduces insurers' incentives for cream skimming in the market for individual health insurance, while preserving incentives for efficiency and cost containment. Under the proposed system of Mandatory High-Risk Pooling (MHRP), each insurer would be allowed to periodically predetermine a small fraction of its members whose costs would be (partially) pooled. The pool would be financed with mandatory, flat-rate contributions. The results suggest that MHRP is a promising supplement to RACPs.
van Barneveld
E M
EM
Department of Health Policy and Management, Erasmus University Rotterdam, The Netherlands.
van Vliet
R C
RC
van de Ven
W P
WP
D002204:Capitation Fee / Q000458:organization & administration / Q000706:statistics & numerical data; D003363:Cost Control; D018166:Health Care Reform / Q000191:economics / Q000458:organization & administration / Q000706:statistics & numerical data; D005102:Health Expenditures / Q000706:statistics & numerical data; D015271:Insurance Pools / Q000191:economics / Q000331:legislation & jurisprudence* / Q000706:statistics & numerical data; D015273:Insurance Selection Bias; D009313:National Health Programs / Q000331:legislation & jurisprudence; D009426:Netherlands; D012044:Regression Analysis; D012052:Reimbursement, Incentive / Q000191:economics / Q000331:legislation & jurisprudence* / Q000706:statistics & numerical data; D012308:Risk Management / Q000331:legislation & jurisprudence* / Q000379:methods; D018855:Single-Payer System