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Risk equalisation and voluntary health insurance markets: The case of Ireland

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  • Armstrong, John

Abstract

Ireland has a system of private health insurance (PHI) which acts as a voluntary alternative to the benefits provided under the Irish public health system. As part of this, community rating has long been a cornerstone of the Irish private health insurance market with the objective to make PHI affordable to everyone regardless of their risk profile. Until the mid-1990s one insurer had a legal monopoly. However, in 1996, following the Third Non-Life Insurance Directive, the market was opened up to competition and a number of regulations were introduced to support community rating. This includes the introduction of a risk equalisation system. Its aim was to prevent selection and thus protect the community rating system while still enabling a competitive health insurance market. There have been significant obstacles to the introduction of risk equalisation due to political, legal and implementation issues. The objective of this paper is to review the history, structure and likely effectiveness of risk equalisation in Ireland. The paper provides lessons for other countries with risk equalisation systems or seeking to introduce such a system. Amongst other conclusions, it outlines the difficulties in introducing risk equalisation.

Suggested Citation

  • Armstrong, John, 2010. "Risk equalisation and voluntary health insurance markets: The case of Ireland," Health Policy, Elsevier, vol. 98(1), pages 15-26, November.
    • Handle: RePEc:eee:hepoli:v:98:y:2010:i:1:p:15-26
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    References listed on IDEAS

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    1. Beck, Konstantin & Spycher, Stefan & Holly, Alberto & Gardiol, Lucien, 2003. "Risk adjustment in Switzerland," Health Policy, Elsevier, vol. 65(1), pages 63-74, July.
    2. Buchner, Florian & Wasem, Jurgen, 2003. "Needs for further improvement: risk adjustment in the German health insurance system," Health Policy, Elsevier, vol. 65(1), pages 21-35, July.
    3. Connelly, Luke B. & Paolucci, Francesco & Butler, James R.G. & Collins, Paul, 2010. "Risk equalisation and voluntary health insurance markets: The case of Australia," Health Policy, Elsevier, vol. 98(1), pages 3-14, November.
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    5. Armstrong, John & Paolucci, Francesco & van de Ven, Wynand P.M.M., 2010. "Risk equalisation in voluntary health insurance markets," Health Policy, Elsevier, vol. 98(1), pages 1-2, November.
    6. Van de ven, Wynand P.M.M. & Ellis, Randall P., 2000. "Risk adjustment in competitive health plan markets," Handbook of Health Economics, in: A. J. Culyer & J. P. Newhouse (ed.), Handbook of Health Economics, edition 1, volume 1, chapter 14, pages 755-845, Elsevier.
    7. Armstrong, John & Paolucci, Francesco & McLeod, Heather & van de Ven, Wynand P.M.M., 2010. "Risk equalisation in voluntary health insurance markets: A three country comparison," Health Policy, Elsevier, vol. 98(1), pages 39-49, November.
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    Cited by:

    1. Panos Kanavos & Olivier Wouters & Olivier J. Wouters & Martin McKee, 2017. "Private Financing of Health Care in Times of Economic Crisis: a Review of the Evidence," Global Policy, London School of Economics and Political Science, vol. 8, pages 23-29, March.
    2. Conor Keegan & Conor Teljeur & Brian Turner & Steve Thomas, 2019. "Switching benefits and costs in the Irish health insurance market: an analysis of consumer surveys," International Journal of Health Economics and Management, Springer, vol. 19(1), pages 15-32, March.
    3. World Bank, 2017. "Georgia Public Expenditure Review," World Bank Publications - Reports 27138, The World Bank Group.
    4. Michiel Bijlsma & Jan Boone & Gijsbert Zwart, 2014. "Competition leverage: how the demand side affects optimal risk adjustment," RAND Journal of Economics, RAND Corporation, vol. 45(4), pages 792-815, December.
    5. Schmid, Christian P.R. & Beck, Konstantin, 2016. "Re-insurance in the Swiss health insurance market: Fit, power, and balance," Health Policy, Elsevier, vol. 120(7), pages 848-855.
    6. repec:bla:glopol:v:8:y:2017:i:s2:p:23-29 is not listed on IDEAS
    7. Conor Keegan & Conor Teljeur & Brian Turner & Steve Thomas, 2017. "Addressing Market Segmentation and Incentives for Risk Selection: How Well Does Risk Equalisation in the Irish Private Health Insurance Market Work?," The Economic and Social Review, Economic and Social Studies, vol. 48(1), pages 61-84.
    8. Francesco Paolucci & Przemyslaw M. Sowa, 2011. "Incentives and Choice in Healthcare," The Economic Record, The Economic Society of Australia, vol. 87(276), pages 174-176, March.
    9. Armstrong, John & Paolucci, Francesco & McLeod, Heather & van de Ven, Wynand P.M.M., 2010. "Risk equalisation in voluntary health insurance markets: A three country comparison," Health Policy, Elsevier, vol. 98(1), pages 39-49, November.

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