Konstantin Beck

Risk adjustment in Switzerland

In Switzerland the new law on Health Insurance, effective since 1996, introduced pro competitive changes in the market of sickness funds. The legislator expected high mobility between sickness funds of both healthy and sick insured as open enrolment was introduced with the new law. That is why the risk adjustment scheme, that was already introduced 1993, was limited until 2005. However, consumer mobility remained low and risk selection strategies are still profitable, since risk-adjustment is based only on demographic variables. This paper describes risk adjustment, consumer mobility, risk selection activities of sickness funds and the impact of imperfect risk adjustment on the development of HMO and PPO models. The paper concludes with a description of the current political and scientific discussion in Switzerland.

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.

Preconditions for efficiency and affordability in competitive healthcare markets: Are they fulfilled in Belgium, Germany, Israel, the Netherlands and Switzerland?

CONTEXT From the mid-1990s several countries have introduced elements of regulated competition in healthcare. The aim of this paper is to identify the most important preconditions for achieving efficiency and affordability under regulated competition in healthcare, and to indicate to what extent these preconditions are fulfilled in Belgium, Germany, Israel, the Netherlands and Switzerland. These experiences can be worthwhile for other countries (considering) implementing regulated competition (e.g. Australia, Czech Republic, Ireland, Russia, Slovakia, US). METHODS We identify and discuss ten preconditions derived from the theoretical model of regulated competition and assess the extent to which each of these preconditions is fulfilled in Belgium, Germany, Israel, the Netherlands and Switzerland. FINDINGS After more than a decade of healthcare reforms in none of these countries all preconditions are completely fulfilled. The following preconditions are least fulfilled: consumer information and transparency, contestable markets, freedom to contract and integrate, and competition regulation. The extent to which the preconditions are fulfilled differs substantially across the five countries. Despite substantial progress in the last years in improving the risk equalization systems, insurers are still confronted with substantial incentives for risk selection, in particular in Israel and Switzerland. Imperfect risk adjustment implies that governments are faced with a complex tradeoff between efficiency, affordability and selection. CONCLUSIONS Implementing regulated competition in healthcare is complex, given the preconditions that have to be fulfilled. Moreover, since not all preconditions can be fulfilled simultaneously, tradeoffs have to be made with implications for the levels of efficiency and affordability that can be achieved. Therefore the optimal set of preconditions is not only an empirical question but ultimately also a matter of societal preferences.

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.

Cream-Skimming in Deregulated Social Health Insurance: Evidence from Switzerland

Policymakers fear that health insurers when exposed to competition will engage in cream-skimming (i.e. selection of good risks) rather than trying to improve their benefit to premium ratio. This fear surfaced also when Swiss federal government proposed pro-competitive Law on social health insurance, which barely passed a popular referendum in 1994. While a risk equalization mechanism based on age, gender, and place of residence has already been created, there is a considerable interest in improving its formula. This paper shows that a dummy variable indicating an individuals death during the period of observation causes the coefficient of determination to jump from 0.039 to 0.111. More-over, simulations of the risk selection process suggest that risk equalization should be made a permanent institution rather than being limited to a life of 10 years as prescribed by present legislation. In fact, the formula in use, with all its shortcomings, can be shown to neutralize to a great extent insurer interest in cream skimming provided he takes a longer-run view.

Risk equalization and voluntary deductibles: A complex interaction

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.

Does risk equalization reduce the viability of voluntary deductibles

Theoretically, a risk avers consumer takes a deductible if the premium rebate (far) exceeds his/her expected out-of-pocket expenditures. In the absence of risk equalization, insurers are able to offer high rebates because those who select into a deductible plan have below-average expenses. This paper shows that, for high deductibles, such rebates cannot be offered if risk equalization would “perfectly” adjust for the effect of self selection. Since the main goal of user charges is to reduce moral hazard, some effect of self selection on the premium rebate can be justified to increase the viability of voluntary deductibles.

Cost trajectories from the final life year reveal intensity of end-of-life care and can help to guide palliative care interventions

Objective Exploration of healthcare utilisation patterns in the final life year to assess palliative care potential. Methods Retrospective cluster analyses (k-means) of anonymised healthcare expenditure (HCE) trajectories, derived from health insurance claims of a representative sample of Swiss decedents who died between 2008 and 2010 (2 age classes: 4818 <66 years, 22 691 elderly). Results 3 (<66 years) and 5 (elderly) trajectory groups were identified, whose shapes were dominated by HCE from inpatient care in hospitals and at nursing homes. In each age class, the most expensive group (average cumulative HCE for <66 years: SFr 84 295; elderly: SFr 84 941) also had the largest abundance of cancers (<66 years: 55%; elderly: 32%) and showed signs of continued treatment intensification until shortly before death. Although sizes of these high-cost groups were comparatively small (26% in younger; 6% in elderly), they contributed substantially to the end-of-life HCE in each age class (62% and 18%, respectively). As age increased, these potential target groups for palliative care gained in share among <66-year olds (from 9% in children to 28% in 60–65-year olds), but decreased from 17% (66–70-year olds) to 1% (>90-year olds) among elderly. Conclusions Cost trajectory clustering is well suited for first-pass population screenings of groups that warrant closer inspection to improve end-of-life healthcare allocation. The Swiss data suggest that many decedents undergo intensive medical treatment until shortly before death. Investigations into the clinical circumstances and motives of patients and physicians may help to guide palliative care.

Failure to pay for social health insurance premiums: Acts of protest or desperation?

Background In Switzerland, basic health insurance is mandatory for all inhabitants, but a rising number of insured have arrears in premium payments, potentially leading to coverage suspension. We aimed at characterizing insured with debt enforcement proceedings with respect to socio-demographic and health utilization aspects. Methods Cross-sectional analysis of 508.000 insured with basic health insurance contracts in 2013, of whom 14,000 (2.8%) with debt enforcement proceedings, from 11 Swiss cantons. Groups were characterized using logistic regression and latent class analysis. Results Insured with debt enforcement proceedings were more likely to be young, male and without dependents (partner, kids). Having no supplementary insurance and receiving partial premium subsidies was associated with an increased debt enforcement proceedings risk. Within the debt enforcement proceedings group, three subgroups were identified: 60% were young and seemingly healthy, with a below-average fraction of premium subsidy recipients (18%) and low out-of-pocket payments in prior year (median Swiss Francs 0). Two groups consisted of relatively ill elderly persons (22%, 99% of whom with chronic illnesses) or families (18%), many of whom (29% and 51%) were recipients of premium subsidies. Median out-of-pocket payments in the prior year were high (Swiss Francs 625 and 688, respectively). Conclusions Sixty percent of premium arrears derive from young insured without apparent financial problems; 40% are owed by elderly and families, which are potentially hurt by coverage loss.

Der Begriff der Krankheit aus gesundheitsökonomischer Sicht – oder warum man gleichzeitig ökonomisch gesund und medizinisch krank sein kann

Der Krankheitsbegriff der Okonomie wird in Abgrenzung zum allgemein ublichen Krankheitsbegriff definiert. Darauf wird die mangelhafte Funktionsweise der Gesundheitsmarkte dargelegt, bevor die Vor- und Nachteile politischer Losungsvorschlage beleuchtet werden.