Current ex-post cost compensations in Dutch risk equalization for health care insurers cannot be built down, the ex-ante risk equalization formula must be improved first. This message is put forward (in Dutch) by the Dutch Patients and Consumers Federation (NPCF) based on the research report “Risk equalization in health insurance: an evaluation and routes to improvement” (available for download in Dutch here). The research has been conducted by the Institute of Health Policy and Management of the Erasmus University Rotterdam (NPCF). The authors of this report are Drs. P.J.A. Stam and Prof.Dr. W.P.M.M. van de Ven, the latter being a leading international authority on risk equalization and managed competition in health care.
In this research the ex-ante risk equalization formula in 2006 is evaluated. For the first time, calculations are based on actual expenditures of a group of 18,000 insured people. A more realistic picture is thus created than on the basis of expectations, as happened in earlier studies.
Risk equalization is one of the pillars under the Health Insurance Act 2006, under which all Dutch citizens are mandatory insured for basic health care. A good system of risk equalization prevents indirect risk selection of certain subgroups of insured people and stimulates insurers to contract desired care for people with a chronic disorder. When the system works not well and insurers are insufficiently compensated, then insurers have an incentive to keep out predictably loss-making customers. Such customers are also not interesting enough for collective contracts. Relevant data in this respect, such as hospitalisations in the last five years and a rank list of insured people who made costs, can easily be obtained by insurers from their own claims administrations.
The researchers conclude that, for specific subgroups of insured people, insurers still lose strong predictable losses of hundreds of euro’s per person per year. At the top of the list, there are insured people who both visisted a medical specialist and took prescribed medecines a year before. They are followed by the subgroup of insured people who visited a medical specialist last year. On the third place, there comes the quarter of insured people who had the highest medical expenses for five consecutive years. Many people with a chronic disorder satisfy one or more of these selection criteria. On the other hand, there are also subgroups of insured people who are predictably profitable. That holds especially for people who never belonged to the quarter of insured people with highest medical expenses in the past five years and for those who were never hospitalized in the past five years.
Although the Netherlands have the most sophisticated ex-ante risk equalization formula in the world, improvement remains necessary. Dutch government does its best to refine the risk equalization formula, but there is still a long way to go. Risk equalization such that all chronically patients are sufficiently compensated will certainly last many years to come.
Because the ex-ante risk equalization formula is still insufficient, Dutch insurers already receive specific ex-post cost compensations based on their actual expenditures. These compensate for approximately half of their losses. However, the Dutch Minister of Health quickly wants to abolish these ex-post reimbursements. Under this scenario, chronically ill patients will become less attractive as insured.
The NPCF urgently appeals to the Dutch Minister of Health not to abolish the ex-post compensation mechanisms before the ex-ante risk equalization formula is adequate. “Do not turn chronic patients into undesirable customers!”, according to the NPCF.