Several European countries have chosen to have a competitive social health insurance market. A major challenge for these countries is to organize the cross subsidies from the low risks to the high risks without creating incentives for inefficiency or for risk selection. In theory good risk equalization is an effective strategy. Because in practice the implementation of good risk equalization is complex, policymakers are confronted with a trade-off between affordability, efficiency, and the adverse effects of risk selection. Although most of the experience in Europe is with risk-adjusted payments to insurers, the relevance of risk-adjusted payments to providers is strongly increasing.

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Keywords Competitive health insurance market, Consumer choice of health insurer, Efficiency, European experience, Pay for-performance, Provider payment, Risk adjustment, Risk equalization, Risk selection
Persistent URL dx.doi.org/10.1016/B978-0-12-375678-7.01303-1, hdl.handle.net/1765/105129
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Citation
van de Ven, W.P.M.M. (2014). Risk Equalization and Risk Adjustment, the European Perspective. In Encyclopedia of Health Economics (pp. 281–288). doi:10.1016/B978-0-12-375678-7.01303-1