Erik Schut

Consumer mobility in social health insurance markets : a five-country comparison.

During the 1990s, the social health insurance schemes of Germany, the Netherlands, Switzerland, Belgium and Israel were significantly reformed by the introduction of freedom of choice (open enrolment) of health insurer. This was introduced alongside a system of risk adjustment to compensate health insurers for enrolees with predictable high medical expenses. Despite the similarity in the health insurance reforms in these countries, we find that both the rationale behind these reforms and their impact on consumer choice vary widely.In this article we seek to explain the observed variation in switching rates by cross-country comparison of the potential determinants of health insurer choice. We conclude that differences in choice setting, and in the net benefits of switching, offer a plausible explanation for the large differences in consumer mobility.Finally, we discuss the policy implications of our cross-country comparison. We argue that the optimal switching rate crucially depends on the goals of the reforms and the quality of the risk-adjustment system. In view of this, we conclude that switching rates are currently too low in the Netherlands, and an active government policy to encourage consumer mobility seems warranted. In Germany and Switzerland, high switching rates call for an improvement of the rather poor risk-adjustment systems. Given low switching rates in Israel and Belgium, improving risk adjustment is less urgent, but still required in the long run.

Consumer price sensitivity in Dutch health insurance

Aim To estimate the price sensitivity of consumer choice of health insurance firm. Method Using paneldata of the flows of insured between pairs of Dutch sickness funds during the period 1993–2002, we estimate the sensitivity of these flows to differences in insurance premium. Results The price elasticity of residual demand for health insurance was low during the period 1993–2002, confirming earlier findings based on annual changes in market share. We find small but significant elasticities for basic insurance but insignificant elasticities for supplementary insurance. Young enrollees are more price sensitive than older enrollees. Conclusion Competition was weak in the market for health insurance during the period under study. For the market-based reforms that are currently under way, this implies that measures to promote competition in the health insurance industry may be needed.

Supplementary health insurance as a tool for risk-selection in mandatory basic health insurance markets

As the share of supplementary health insurance (SI) in health care finance is likely to grow, SI may become an increasingly attractive tool for risk-selection in basic health insurance (BI). In this paper, we develop a conceptual framework to assess the probability that insurers will use SI for favourable risk-selection in BI. We apply our framework to five countries in which risk-selection via SI is feasible: Belgium, Germany, Israel, the Netherlands, and Switzerland. For each country, we review the available evidence of SI being used as selection device. We find that the probability that SI is and will be used for risk-selection substantially varies across countries. Finally, we discuss several strategies for policy makers to reduce the chance that SI will be used for risk-selection in BI markets.

Can Risk Adjustment Prevent Risk Selection in a Competitive Long-Term Care Insurance Market?

When public long-term care (LTC) insurance is provided by insurers, they typically lack incentives for purchasing cost-effective LTC. Providing insurers with appropriate incentives for efficiency without jeopardizing access for high-risk individuals requires, among other things, an adequate system of risk adjustment. While risk adjustment is now widely adopted in health insurance, it is unclear whether adequate risk adjustment is feasible for LTC because of its specific features. We examine the feasibility of risk adjustment for LTC insurance using a rich set of linked nationwide Dutch administrative data. Prior LTC use and demographic information are found to explain much of the variation, while prior health care expenditures are important in reducing predicted losses for subgroups of health care users. Nevertheless, incentives for risk selection against some easily identifiable subgroups persist. Moreover, using prior utilization and expenditure as risk adjusters dilutes incentives for efficiency, but using multiyear data may reduce this disadvantage.

Preferenties voor zorg en zorgverzekeraars

SamenvattingIn de nieuwe zorgverzekering onderhandelen zorgverzekeraars met zorgaanbieders over de kwaliteit en de prijs van de te leveren zorg. Het is de bedoeling dat zorgverzekeraars mede op basis van de gecontracteerde kwaliteit van zorg met elkaar gaan concurreren op de zorgverzekeringsmarkt. Inzicht in de preferenties van consumenten is daarbij cruciaal. Dit onderzoek presenteert de resultaten van een vignettenmethode waarmee de stated preferences van individuen voor de hoogte van de verzekeringspremie, de kwaliteit van dienstverlening en de kwaliteit van de door zorgverzekeraars gecontracteerde zorg worden gemeten. In het onderzoek wordt voorts empirisch getoetst of mensen met een chronische aandoening andere preferenties hebben ten aanzien van hun zorgverzekeraar dan mensen zonder chronische aandoening. De vignettenmethode laat zien dat zowel mensen met als zonder chronische aandoening bereid zijn een hogere premie te betalen als zorgverzekeraars objectief zouden kunnen aantonen dat dankzij hun zorginkoop/contracteerbeleid verzekerden bij bepaalde aandoeningen een grotere kans hebben op een verbetering van hun gezondheid. Het kan dus lonen voor een zorgverzekeraar om te investeren in de kwaliteit van zorg, mits hij de opbrengst van deze investeringen duidelijk kan maken en op dit terrein een reputatie kan verwerven. Meer procesmatige aspecten van zorgverlening en service aspecten van de zorgverzekeraar spelen een minder belangrijke rol.Preferences health and health insurersManaged competition implies that health insurers negotiate with care suppliers about price and quality of purchased care. An important precondition for workable competition is that consumers are sensitive to both differences in price and quality. Little is known, however, about consumer preferences with respect to medical care purchased by health insurers. This paper aims to provide more insight into consumer preferences for the different aspects of health insurance. Anticipating insurers’ new role as prudent buyers of health services, clients’ stated preferences regarding quality of care are measured by means of conjoint analysis. Conjoint analysis enables us to compare preferences regarding quality of care with preferences regarding quality of insurers’ service providing and premium. We also test for differences in preferences between clients with and without a chronic condition. Empirical results show that clients with and without a chronic condition are willing to pay the highest premiums for care with favourable health outcomes. Insurer’s investments in quality of purchased care could, therefore, pay off under the condition that they are able to build a reputation of providing for high quality care. Clients are less inclined to pay for process oriented aspects of care and service aspects of insurers.

Does Price Competition Damage Healthcare Quality

One of the reasons why regulators are hesitant about permitting price competition in healthcare markets is that it may damage quality when information is poor. Evidence on whether this fear is well-founded is scarce. We provide evidence using a reform that permitted Dutch health insurers and hospitals to freely negotiate prices for elective procedures. Unlike previous research that has relied on indicators of the quality of urgent treatments, we take advantage of the plausible absence of selection bias in our setting to identify the effect on quality of non-acute hip replacements. Using administrative data on all admissions to Dutch hospitals, we find no evidence that increased exposure to price competition reduces quality measured by readmission rates, despite the lack of publicly available information on this outcome. In fact, there is evidence of a temporary, positive impact on quality. Our estimated null effect over the full post-liberalization period is robust.

Handbook of Health Economics

textabstractEditors and authors should be complimented for their impressive attempt to provide a fair account of the state-of-the-art in health economics. To review such an extensive work in a short time span, we decided to select certain chapters for more in depth study. This selection was based on our areas of expertise under the restriction that all major research areas distinguished in the handbook should be covered. Before turning to the review of the separate chapters, let us first make some general comments about the handbook. An important first question is whether all relevant research areas are covered and whether this has been done in a balanced way. Of course, exhaustive coverage in one book is unattainable for a large area like health economics. Rather the question is that regarding balance and possible lack of bias. In that respect, the book focuses on the US literature and health care system with 24 chapters written by US authors and only 11 by European and Canadian authors. The more traditional economic areas are generally covered by the US authors, emphasising a neo-classical rather than an institutional paradigm, and boundary topics like ‘equity’ and the ‘measurement of health’ are covered by the non-US authors. This structure both reflects the contributions in the health economics literature and the large variation in US health care institutions, and is only troublesome in some chapters as suggested below.