The institutional setting and its solidarity components

The institutional setting and its solidarity components

• The institutional setting and its solidarity components

• The problem with solidarity → risk selection

• How do insurers select?
• How appropriate is the reform of risk equalization?

• The problem with efficiency → unintended redistribution

• Conclusions

Swiss Social health insurance is mandatory for all inhabitants

• Swiss Social health insurance is mandatory for all inhabitants

• 64 competitive insurers offer the strictly defined package of services (covers 40% of total HCE or 24 Billion CHF)

• Open enrolment (annual / semi annual)

• Community rated premium / differentiation according to coverage (as higher deductibles, managed care) and geography

• Copayment (14 %)

Insurers also offer supplementary insurance

• Insurers also offer supplementary insurance

• Basic package is a non-profit business

• Voluntary higher copayment or restricted access to care (gatekeeping/managed care) entitles for premium rebates up to 50%

• 51% of the total population opt for managed care

• Inpatient care is subsidised by 55%

• Changes in Social Health insurance must be approved by Swiss voters

Access to health supply → mandatory coverage

• Access to health supply → mandatory coverage

• Income solidarity → Individual transfers to low income citizens to reduce premium burden and 55% of inpatient care is tax financed

• Age solidarity → one premium for ages 26 to death

• Health solidarity → Community rated premium, open enrolment

The institutional setting and its solidarity components

• The institutional setting and its solidarity components

• The problem with solidarity → risk selection

• How do insurers select?
• How appropriate is the reform of risk equalization?

• The problem with efficiency → unintended redistribution

• Conclusions

Insurers have clear incentives to reduce costs that lowers premium

• Insurers have clear incentives to reduce costs that lowers premium

• By selling high copayment plans and reduce moral hazard
• By selling managed care plans

• But they have as well incentives to do selection:

• Profit: Beck/Zweifel (1996) showed in a simulation: Up to 50% premium advantage is possible despite risk adjustment
• It’s an effective measure to prevent bankruptcy

1996 slightly improved demographic formula

• 1996 slightly improved demographic formula

• 1998: CSS insurance proposes prior hospitalization as a first step to improve the formula

1996 slightly improved demographic formula

• 1996 slightly improved demographic formula

• 1998: CSS insurance proposes prior hospitalization as a first step to improve the formula

• 2007: Decision of the national parliament to introduce prior hospitalization in 2012.

• Meanwhile a PCG-formula (CSS & Erasmus University) and an AP-DRG-Model (University of Lausanne) have been developed.

• R2 Demographic 11% + prior hospitalisation 21% + Pharmaceutical Cost Groups 30%

• 2011: The minister of health defines a PCG-formula as a goal for 2017

Premium 2008

• Premium 2008

• RA-Reform

• Premium 2009

• Premium 2010

• Premium 2011

• Premium 2012

The index measures the minimum impact risk selection has on solidarity (new revised formula von Wyl/Beck, 2012)

• The index measures the minimum impact risk selection has on solidarity (new revised formula von Wyl/Beck, 2012)

The institutional setting and its solidarity components

• The institutional setting and its solidarity components

• The problem with solidarity → risk selection

• How do insurers select?
• How appropriate is the reform of risk equalization?

• The problem with efficiency → unintended redistribution

• Conclusions