erasmus university rotterdam arm orlando 03jun07 1 annual research meeting (arm) academyhealth,...
TRANSCRIPT
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Annual Research Meeting (ARM)
AcademyHealth, Orlando, 03Jun07
Evaluation of the Dutch Risk Equalization system: are the insurers
confronted with predictable losses for the chronically ill?
Wynand P.M.M. van de Ven ([email protected])
Pieter J.A. StamRene C.J.A. Van Vliet
Erasmus University Rotterdam
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Health Insurance Act: 01jan06
• Mandate for everyone in the Netherlands to buy private health insurance;
• Standard benefits package;
• Selective contracting allowed;
• Open enrolment per product per insurer;
• Community rating per product per insurer per province;
• Risk equalization.
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Risk Equalization Fund (REF)
premium (18+)
REF-payment based on risk adjusters
REF
Insured Insurer
Income-related contribution
Gov’t contribution (18-)
50%
50%
Two thirds of all households receive an income-related care allowance (at most € 420 per person per year)
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Risk adjusters in the Dutch REFYear New risk adjuster
1992 Age/gender1995 Region, yes/no employee, disability1997 Age/disability2002 Pharmacy-based Cost Groups (PCGs)
(13 PCGs and about 7% of population)2004 Diagnostic Cost Groups (DCGs) (about 2% of pop)
yes/no self-employed2007 Multiple PCGs allowed (co-morbidity);
New PCGs: mental health (3% pop.), cancer and growth hormons(20 PCGs and about 16% of population)
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Effects of selection
• Disincentive for insurers to be responsive to the high-risk consumers and contract the best quality care for them;
• Disincentive for providers to acquire the best reputation for treating chronic diseases;
• Selection more profitable than efficiency;
• High premiums for high-risk patients;
• Instability in the insurance market.
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Objective & Research questions
Objective: evaluate the risk equalization system.
Research questions:
1. Are there identifiable subgroups of consumers with predictable lossses?
2. If so: How large are these subgroups? And how large are the predictable losses?In particular we focus on subgroups of persons with a chronic condition or with above average utilization rates in previous years.
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Method
• Data: all information in the files of a large insurer (Agis) over the period 1998 – 2004, combined with an individual health survey (held in 2001); some 30,000 observations.
• Method: the Dutch 2007 risk adjusters are applied to the 2004-data. By comparing the predicted 2004-expenditures (based on the 2007 risk adjusters) with their actual 2004-expenditures we calculated the average profits and losses for many subgroups.
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Results (costs and losses in euro)
Subgroup 2001 SizeCosts 2004
Predictable losses 2004
Self-reported health status fair/poor 21.2% 3404 541
Worst score Physical functioning (SF-36)
10.0% 4469 1140
Worst score Social functioning (SF-36) 10.0% 3190 649
Restricted in mobility (OECD-score) 14.9% 3740 653
Stroke, brain haemorrhage/ infarction 2.6% 4341 943
Myocardial infarction 3.3% 4755 789
Other serious heart disease 2.3% 4654 926
Some type of (malignant) cancer 4.8% 3440 689
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Results (costs and losses in euro)
Subgroup 2001 SizeCosts 2004
Predictable losses 2004
High bloodpressure 15.2% 2961 342
Astma, chronic bronchitis, emphysema 8.1% 3182 460 3-6 self-reported conditions 22.3% 2848 333
7 or more self-reported conditions 2.9% 4833 1461
Prescribed drugs (self reported, 2 weeks)
48.2% 2597 220
Contact specialist (self reported, 1 year) 39.8% 2586 317
Hospitalization (self reported, 1 year) 7.5% 3611 1034
Home care (self reported, 1 year) 2.2% 4258 1152
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Results (costs and losses in euro)
Subgroup 1997 - 2001 SizeCosts 2004
Predictable losses 2004
In top-25% highest costs, in 3 of 5 years 5.9% 2537 238
In top-25% highest costs, in 4 of 5 years 4.5% 3240 304In top-25% highest costs, in 5 of 5 years 8.2% 6131 1757
Hospitalization in 2 of the 5 years 4.7% 3613 728
Hospitalization in 3 of the 5 years 1.1% 6606 2030
Hospitalization in 4 of the 5 years 0.3% 11763 5933
Hospitalization in 5 of the 5 years 0.1% 14373 6453
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Conclusions1. Many subgroups, from <1% to 30% of
population, with predictable losses in the order of hundreds to thousands euros per person per year.
2. Also predictable losses for subgroups of insured whose disease is included as a risk adjuster in the risk equalization formula (e.g. heart problems, cancer, …).
3. Improvement of the risk equalization system needs a high priority. Otherwise the disadvantages due to risk selection may outweigh the advantages of competition.
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New (potential) risk-adjusters
• Diagnostic information not only from prior hospitalization, but from all prior medical encounters (Diagnosis Treatment Combinations, DTCs) expected to be implemented in 2009;
• Multiyear-DCG’s;• A better indicator of invalidity (or
functional heath status);• Yes/no voluntary deductible;• ……