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The case for risk-based premiums in public health insurance

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  • Zweifel, Peter
  • Breuer, Michael

Abstract

Uniform, risk-independent insurance premiums are accepted as part of ‘managed competition’ in health care. However, they are not compatible with optimality of health insurance contracts in the presence of both ex ante and ex post moral hazard. They have adverse effects on insurer behaviour even if risk adjustment is taken into account. Risk-based premiums combined with means-tested, tax-financed transfers are advocated as an alternative.

Suggested Citation

  • Zweifel, Peter & Breuer, Michael, 2006. "The case for risk-based premiums in public health insurance," Health Economics, Policy and Law, Cambridge University Press, vol. 1(2), pages 171-188, April.
    • Handle: RePEc:cup:hecopl:v:1:y:2006:i:02:p:171-188_00
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    Cited by:

    1. Kifmann, Mathias & Roeder, Kerstin, 2011. "Premium subsidies and social health insurance: Substitutes or complements?," Journal of Health Economics, Elsevier, vol. 30(6), pages 1207-1218.
    2. K. P. M. Winssen & R. C. Kleef & W. P. M. M. Ven, 2016. "Potential determinants of deductible uptake in health insurance: How to increase uptake in The Netherlands?," The European Journal of Health Economics, Springer;Deutsche Gesellschaft für Gesundheitsökonomie (DGGÖ), vol. 17(9), pages 1059-1072, December.
    3. H. E. Frech & Peter Zweifel, 2017. "Market Socialism and Community Rating in Health Insurance," Comparative Economic Studies, Palgrave Macmillan;Association for Comparative Economic Studies, vol. 59(3), pages 405-427, September.
    4. H. E. Frech & Michael P. Smith, 2015. "Anatomy of a Slow-Motion Health Insurance Death Spiral," North American Actuarial Journal, Taylor & Francis Journals, vol. 19(1), pages 60-72, January.
    5. Peter Zweifel & H. E. Frech, 2016. "Why ‘Optimal’ Payment for Healthcare Providers Can Never be Optimal Under Community Rating," Applied Health Economics and Health Policy, Springer, vol. 14(1), pages 9-20, February.
    6. Ousmane Traoré, 2021. "The relationship between health poverty and income poverty in Sub-Saharan African countries: evidence from index correlations," SN Business & Economics, Springer, vol. 1(10), pages 1-19, October.
    7. Buchner Florian & Deppisch Rebecca & Wasem Jürgen, 2007. "Umverteilungseffekte in der Finanzierung von Gesundheitsleistungen / Redistribution Effects of Health Care Financing," Journal of Economics and Statistics (Jahrbuecher fuer Nationaloekonomie und Statistik), De Gruyter, vol. 227(5-6), pages 699-724, October.
    8. Mathias Kifmann & Kerstin Roeder, "undated". "Premium Subsidies and Social Insurance: Substitutes or Complements?," Working Papers 2011/01, Hamburg Center for Health Economics, University of Hamburg.
    9. Pfarr, Christian & Schmid, Andreas, 2013. "The political economics of social health insurance: the tricky case of individuals’ preferences," MPRA Paper 44534, University Library of Munich, Germany.
    10. Sengupta, Reshmi & Rooj, Debasis, 2019. "The effect of health insurance on hospitalization: Identification of adverse selection, moral hazard and the vulnerable population in the Indian healthcare market," World Development, Elsevier, vol. 122(C), pages 110-129.
    11. Susanna Kochskämper, 2012. "Reformdebatten in der Krankenversicherung vor dem Hintergrund des europäischen Binnenmarktes," Otto-Wolff-Institut Discussion Paper Series 02/2012, Otto-Wolff-Institut für Wirtschaftsordnung, Köln, Deutschland.
    12. Christine Arentz, 2012. "Auswirkungen von Gentests in der Krankenversicherung," Otto-Wolff-Institut Discussion Paper Series 04/2012, Otto-Wolff-Institut für Wirtschaftsordnung, Köln, Deutschland.
    13. Janet Vroomen & Peter Zweifel, 2011. "Preferences for health insurance and health status: does it matter whether you are Dutch or German?," The European Journal of Health Economics, Springer;Deutsche Gesellschaft für Gesundheitsökonomie (DGGÖ), vol. 12(1), pages 87-95, February.
    14. van de Ven, Wynand P.M.M. & Beck, Konstantin & Van de Voorde, Carine & Wasem, Jurgen & Zmora, Irit, 2007. "Risk adjustment and risk selection in Europe: 6 years later," Health Policy, Elsevier, vol. 83(2-3), pages 162-179, October.
    15. Peter Zweifel, 2015. "An Economist’s Influence on Health Policy," Applied Health Economics and Health Policy, Springer, vol. 13(3), pages 265-267, June.
    16. Peter Zweifel, 2013. "The present state of health economics: a critique and an agenda for the future," The European Journal of Health Economics, Springer;Deutsche Gesellschaft für Gesundheitsökonomie (DGGÖ), vol. 14(4), pages 569-571, August.
    17. Beck, Konstantin & Trottmann, Maria & Zweifel, Peter, 2010. "Risk adjustment in health insurance and its long-term effectiveness," Journal of Health Economics, Elsevier, vol. 29(4), pages 489-498, July.
    18. Eugster, Patrick & Sennhauser, Michèle & Zweifel, Peter, 2010. "Capping risk adjustment?," Journal of Health Economics, Elsevier, vol. 29(4), pages 499-507, July.
    19. Christine Arentz & Johann Eekhoff & Susanna Kochskämper, 2012. "Private health insurance: a role model for European health systems," The European Journal of Health Economics, Springer;Deutsche Gesellschaft für Gesundheitsökonomie (DGGÖ), vol. 13(5), pages 615-621, October.
    20. Christine Arentz, 2011. "Medizinisch-technischer Fortschritt im Gesundheitswesen: Zentrale Kosten-Nutzen-Bewertung ohne Alternative?," Otto-Wolff-Institut Discussion Paper Series 01/2011, Otto-Wolff-Institut für Wirtschaftsordnung, Köln, Deutschland.

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