Many countries rely on regulated competition in health insurance markets to provide health insurance to all or significant segments of their populations. The general intention is to combine individual affordability of health plans with incentives for efficiency. Health plan payment systems – i.e. ways in which health plans are financed – play a crucial role in achieving this goal.

Risk Adjustment, Risk Sharing and Premium Regulation in Health Insurance Markets provides a conceptual and practical toolkit to understand and evaluate the functioning of health plan payment systems, and draws lessons from international experiences. The first part of the book describes the goals, design, and evaluation of health plan payment systems. Chapter 1 discusses the role of health plan payment in regulated health insurance markets. Chapter 2 describes key aspects of payment design (i.e. premium regulation, risk sharing and risk adjustment) and discusses how these aspects relate to public objectives such as efficiency, individual affordability, fairness and avoidance of risk selection. Chapter 3 takes a closer look on the most complex aspect, risk adjustment, and provides a conceptual toolkit for specifying a risk adjustment formula. Chapter 4 dives into the concept and details of risk sharing, another important tool for health plan payment design. Chapter 5 provides a practical toolkit for evaluating payment systems and illustrates various evaluation measures. We show how the “right” measure follows from the specific goals of a health plan payment system.

Within a common framework, the second part of the book describes the health plan payment systems applied in Australia, Belgium, Chile, China, Colombia, Germany, Ireland, Israel, the Netherlands, Russia, Switzerland, the United States (Marketplaces, Medicaid and Medicare Advantage). Authors discuss the evolution of these payment schemes as well as ongoing reforms and draw key lessons for the design of health plan payment.

About the Authors

Thomas McGuire is a professor of health economics in the Department of Health Care Policy at Harvard Medical School and a Research Associate at the National Bureau of Economic Research. His research focuses on the design and impact of health care payment systems, the economics of health care disparities, and the economics of mental health policy and drug regulation and payment. McGuire has contributed to the theory of physician, hospital, and health plan payment.  McGuire was a coeditor of the Handbook of Health Economics Volume 2 (2012) and recently completed ten years as an editor of the Journal of Health Economics.

Richard van Kleef works as an associate professor at the Erasmus School of Health Policy and Management of the Erasmus University Rotterdam. His research and teaching focus on economic aspects of health insurance and health care markets. Specific areas of expertise are health plan payment and consumer cost sharing. Richard has published his research in national and international journals including the Journal of Health Economics, The European Journal of Health Economics, Medical Care, Health Affairs, and Health Policy. Richard is also a policy advisor, the chairman of the Dutch/Flemish Health Economics Association and a member of the risk adjustment network (RAN).

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