title: High cost pool or high cost groups-How to handle high(est) cost cases in a risk adjustment mechanism?
abstract: Competitive social health insurance systems (at least) in Western Europe have implemented systems of morbidity based risk adjustment to set a level playing field for insurers. However, many high cost insured still are heavily underfunded despite risk adjustment, leaving incentives for risk selection. In most of these health care systems, there is an ongoing debate about how to deal with such underpaid high cost cases. This study develops four distinct concepts by adding variables to risk adjustment or by setting up a high cost pool for underpaid insured besides the risk adjustment system. Their features, incentives and distributional effects are discussed. With a data set of 6 million insured, performance is demonstrated for Germany. All models achieve a substantial improvement in model fit, measured in terms of R(2) as well as CPM. As the results of the various models are different in different dimensions, the trade-offs that have to be dealt with and should be addressed, when implementing a model to reduce underfunding of high cost cases.
authors.affiliation: Institute for Health Care Management and Research, University Duisburg-Essen, Thea-Leymann-Str. 9, Essen D-45127, Germany; Health Economics Center CINCH, Essen, Germany. Electronic address: Sonja.Schillo@uni-due.de.
authors.forename: Sonja
authors.initials: S
authors.lastname: Schillo
authors.affiliation: Institute for Health Care Management and Research, University Duisburg-Essen, Thea-Leymann-Str. 9, Essen D-45127, Germany; Health Economics Center CINCH, Essen, Germany. Electronic address: Gerald.Lux@medman.uni-due.de.
authors.forename: Gerald
authors.initials: G
authors.lastname: Lux
authors.affiliation: Institute for Health Care Management and Research, University Duisburg-Essen, Thea-Leymann-Str. 9, Essen D-45127, Germany; Health Economics Center CINCH, Essen, Germany. Electronic address: Juergen.Wasem@medman.uni-due.de.
authors.forename: Juergen
authors.initials: J
authors.lastname: Wasem
authors.affiliation: Department for Health Sciences and Social Work, University of Applied Sciences Carinthia, Hauptplatz A-9560, Feldkirchen i. K, Germany; Health Economics Center CINCH, Essen, Germany. Electronic address: F.Buchner@fh-kaernten.at.
authors.forename: Florian
authors.initials: F
authors.lastname: Buchner
mesh_terms: D004465:Economic Competition; D005060:Europe; D006801:Humans; D015273:Insurance Selection Bias; D007348:Insurance, Health / Q000191:economics*; D009313:National Health Programs / Q000191:economics*; D020379:Risk Adjustment / Q000379:methods*
keywords: Germany; Health insurance; High cost cases; High cost pool; Risk adjustment