The case for risk-based premiums in public health insurance.
Uniform, risk-independent insurance premiums are accepted as part of 'managed competition' in health care. However, they are not compatible with optimality of health insurance contracts in the presence of both ex ante and ex post moral hazard. They have adverse effects on insurer behaviour even if risk adjustment is taken into account. Risk-based premiums combined with means-tested, tax-financed transfers are advocated as an alternative.
Zweifel
Peter
P
Socioeconomic Institute of the University of Zurich, Switzerland. pzweifel@soi.unizh.ch
Breuer
Michael
M
D004465:Economic Competition; D015273:Insurance Selection Bias; D007348:Insurance, Health / Q000191:economics* / Q000941:ethics; D017150:Public Sector; D020379:Risk Adjustment / Q000458:organization & administration*; D013660:Taxes