- Title
- Should administrative costs in health insurance be included in the risk-equalization? An analysis of five countries
- Creator
- Douven, Rudy; Kauer, Lukas; Demme, Sylvia; Paolucci, Francesco; van de Ven, Wynand; Wasem, Jürgen; Zhao, Xiaoxi
- Relation
- European Journal of Health Economics Vol. 23, Issue 9, p. 1437-1453
- Publisher Link
- http://dx.doi.org/10.1007/s10198-022-01436-y
- Publisher
- Springer
- Resource Type
- journal article
- Date
- 2022
- Description
- Most countries that apply risk-equalization in their health insurance market(s) perform risk-equalization on medical claims but do not include other components of the insurance premium, such as administrative costs. Using fixed effects panel regressions from individual insurers in Australia, Germany, the Netherlands, Switzerland, and the US, we find evidence that health insurers with a high morbidity population on average have higher administrative costs. We argue that administrative costs should also be included in risk-equalization and we show that such equalization results in additional equalization payments nontrivial in size. Using examples from Germany and the US, we show how in practice policymakers can include administrative costs in risk-equalization. We are skeptical about applying risk-equalization to other components of the insurance premium, such as profits or costs related to solvency requirements of insurers.
- Subject
- risk-equalization; risk-equalization payments; administrative insurance costs; loading fee; medical claims
- Identifier
- http://hdl.handle.net/1959.13/1468073
- Identifier
- uon:47986
- Identifier
- ISSN:1618-7598
- Rights
- Open Access This article is licensed under a Creative Commons Attribution 4.0 International License, which permits use, sharing, adaptation, distribution and reproduction in any medium or format, as long as you give appropriate credit to the original author(s) and the source, provide a link to the Creative Commons licence, and indicate if changes were made. The images or other third party material in this article are included in the article's Creative Commons licence, unless indicated otherwise in a credit line to the material. If material is not included in the article's Creative Commons licence and your intended use is not permitted by statutory regulation or exceeds the permitted use, you will need to obtain permission directly from the copyright holder. To view a copy of this licence, visit http://creativecommons.org/licenses/by/4.0/.
- Language
- eng
- Full Text
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