M13: Competitive Social health insurance markets
3 important questions on M13: Competitive Social health insurance markets
What is risk equalization and which two modalities are observed?
Two modalities of risk equalization are observed:
- The consumer pays the contribution C directly to the Subsidy Fund (Modality B);
- The consumer pays the contribution C to the Subsidy Fund via the insurer (Modality C).
Good risk equalization offers the only effective escape from the trade-off between affordability, efficiency and selection. Agree?
Risk-adjusted subsidies or risk equalization is the preferred strategy because:
- The better the risk equalization is, the less severe is the resulting tradeoff.
- In the (theoretical) case of perfect risk equalization there is no need for any other strategy and the tradeoff no longer exists.
- Each of the other strategies alone inevitably confronts policymakers with a tradeof
What is the difference between one-sided and two-sided risk-sharing?
In a two-sided risk-sharing model, the providers also share in the possible losses with the payer: both upside and downside risk
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