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Should catastrophic risks be included in a regulated competitive health insurance market?

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  • van de Ven, Wynand P.M.M.
  • Schut, Frederik T.

Abstract

In 1988 the Dutch government launched a proposal for a national health insurance based on regulated competition. The mandatory benefits package should be offered by competing insurers and should cover both non-catastrophic risks (like hospital care, physician services and drugs) and catastrophic risks (like several forms of expensive long-term care). However, there are two arguments to exclude some of the catastrophic risks from the competitive insurance market, at least during the implementation process of the reforms. Firstly, the prospects for a workable system of risk-adjusted payments to the insurers that should take away the incentives for cream skimming are, at least during the next 5 years, more favorable for the non-catastrophic risks than for the catastrophic risks. Secondly, even if a workable system of risk-adjusted payments can be developed, the problem of quality skimping may be relevant for some of the catastrophic risks, but not for non-catastrophic risks. By 'quality skimping' we mean the reduction of the quality of care to a level which is below the minimum level that is acceptable to society. After 5 years of health care reforms in the Netherlands new insights have resulted in a growing support to confine the implementation of the reforms to the non-catastrophic risks. In drawing (and redrawing) the exact boundaries between different regulatory regimes for catastrophic and non-catastrophic risks, the expected benefits of a cost-effective substitution of care have to be weighted against the potential harm caused by cream skimming and quality skimping.

Suggested Citation

  • van de Ven, Wynand P.M.M. & Schut, Frederik T., 1994. "Should catastrophic risks be included in a regulated competitive health insurance market?," Social Science & Medicine, Elsevier, vol. 39(10), pages 1459-1472, November.
  • Handle: RePEc:eee:socmed:v:39:y:1994:i:10:p:1459-1472
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    Citations

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    Cited by:

    1. Gross, Revital & Rosen, Bruce & Chinitz, David, 1998. "Evaluating the Israeli health care reform: strategy, challenges and lessons," Health Policy, Elsevier, vol. 45(2), pages 99-117, August.
    2. Roger Feldman & Carlos Escribano & Laura Pellisé, 1998. "The role of government in health insurance markets with adverse selection," Health Economics, John Wiley & Sons, Ltd., vol. 7(8), pages 659-670, December.
    3. Frederik T. Schut & Wynand P. M. M. Van de Ven, 2005. "Rationing and competition in the Dutch health‐care system," Health Economics, John Wiley & Sons, Ltd., vol. 14(S1), pages 59-74, September.
    4. van Barneveld, Erik M. & Lamers, Leida M. & van Vliet, Rene C. J. A. & van de Ven, Wynand P. M. M., 2001. "Risk sharing as a supplement to imperfect capitation: a tradeoff between selection and efficiency," Journal of Health Economics, Elsevier, vol. 20(2), pages 147-168, March.
    5. Chinitz, David & Meislin, Rachel & Alster-Grau, Ilana, 2009. "Values, institutions and shifting policy paradigms: Expansion of the Israeli National Health Insurance Basket of Services," Health Policy, Elsevier, vol. 90(1), pages 37-44, April.
    6. Schut, Frederik T. & van Doorslaer, Eddy K. A., 1999. "Towards a reinforced agency role of health insurers in Belgium and the Netherlands," Health Policy, Elsevier, vol. 48(1), pages 47-67, July.
    7. van de Ven, Wynand P. M. M., 1995. "Regulated competition in health care: With or without a global budget?," European Economic Review, Elsevier, vol. 39(3-4), pages 786-794, April.
    8. van de Ven, Wynand P. M. M. & Beck, Konstantin & Buchner, Florian & Chernichovsky, Dov & Gardiol, Lucien & Holly, Alberto & Lamers, Leida M. & Schokkaert, Erik & Shmueli, Amir & Spycher, Stephan & Van, 2003. "Risk adjustment and risk selection on the sickness fund insurance market in five European countries," Health Policy, Elsevier, vol. 65(1), pages 75-98, July.
    9. van Barneveld, Erik M. & van Vliet, ReneC. J. A. & van de Ven, Wynand P. M. M., 1997. "Risk-adjusted capitation payments for catastrophic risks based on multi-year prior costs," Health Policy, Elsevier, vol. 39(2), pages 123-135, February.
    10. World Bank, 2009. "Europe and Central Asia - Health insurance and competition," World Bank Publications - Reports 3064, The World Bank Group.

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