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?
All countries that apply risk-adjusted subsidies give the subsidy to the insurer who deducts it from the premium. In this way the different risks that consumers represent for the insurer are equalized.
Two modalities of risk equalization 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?
Agree, because:
Risk-adjusted subsidies or risk equalization is the preferred strategy because:
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 one-sided risk-sharing model, the providers only share in the possible savings with the payer: only upside risk
In a two-sided risk-sharing model, the providers also share in the possible losses with the payer: both upside and downside risk
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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