The case for risk-based premiums in public health insurance
- 1 January 2006
- journal article
- research article
- Published by Cambridge University Press (CUP) in Health Economics, Policy and Law
- Vol. 1 (2) , 171-188
- https://doi.org/10.1017/s1744133105001064
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.Keywords
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