Risk-adjusted capitation payment systems for health insurance plans in a competitive market

Abstract
Adequate risk-adjustment is critical to the success of market-oriented healthcare reforms in many countries. Regulated competition among insurers and providers is often a crucial element in these reforms. Consumers may then choose among competing health insurance plans, which are largely financed through premium-replacing risk-adjusted capitation payments. Too crude risk-adjustment, which is common in 2003, provides health insurance plans with incentives for risk selection, which may threaten access to (good quality) healthcare, efficiency and consumer satisfaction. In this review the background and rationale for the implementation of risk-adjusted capitation payments is described. The authors are optimistic about the possibilities for improving the present, crude risk-adjusted capitation payment systems in order to reduce risk selection.