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Risk adjustment and the fear of markets: the case of Belgium
E Schokkaert1, C Van de Voorde
1Center for Economic Studies, KU Leuven, Belgium. erik.schokkaert@econ.kuleuven.ac.be
Abstract:
In Belgium the management and administration of the compulsory and universal health insurance is left to a limited number of non-governmental non-profit sickness funds. Since 1995 these sickness funds are partially financed in a prospective way. The risk adjustment scheme is based on a regression model to explain medical expenditures for different social groups. Medical supply is taken out of the formula to construct risk-adjusted capitation payments. The risk-adjustment formula still leaves scope for risk selection. At the same time, the sickness funds were not given the instruments to exert a real influence on expenditures and the health insurance market has not been opened for new entrants. As a consequence, Belgium runs the danger of ending up in a situation with little incentives for efficiency and considerable profits from cream skimming.
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