Falling ill raises the health insurer's administration bill.

In many countries, governments use payment systems to compensate health insurers more for enrollees with higher expected costs. However, little empirical research has examined whether these payment systems should also include health insurers' administrative costs. We provide two sources of evidence that health insurers with a more morbid population have higher administrative costs. First, we show at the customer level a causal relationship between individual morbidity and individual administrative contacts with the insurer, using the weekly evolution of the number of individual customer contacts (calls, emails, in-person visits etc.) of a large Swiss health insurer. Using a difference-in-differences design, we find that the onset of a chronic illness causes on average a persistent increase of about 40% in individuals' contacts with the health insurer. Second, we provide evidence that this relationship also holds for total administrative costs at the insurer level. We study twenty years of Swiss health insurance market data and find a positive elasticity of around 1, indicating that, all else equal, an insurer with a more morbid population, equal to 1% more health care spending, faces about 1% higher administrative costs.

Should administrative costs in health insurance be included in the risk-equalization? An analysis of five countries.

Most countries that apply risk-equalization in their health insurance market(s) perform risk-equalization on medical claims but do not include other components of the insurance premium, such as administrative costs. Using fixed effects panel regressions from individual insurers in Australia, Germany, the Netherlands, Switzerland, and the US, we find evidence that health insurers with a high morbidity population on average have higher administrative costs. We argue that administrative costs should also be included in risk-equalization and we show that such equalization results in additional equalization payments nontrivial in size. Using examples from Germany and the US, we show how in practice policymakers can include administrative costs in risk-equalization. We are skeptical about applying risk-equalization to other components of the insurance premium, such as profits or costs related to solvency requirements of insurers.

Finding the way forward: COVID-19 vaccination progress in Germany, Austria and Switzerland.

Objectives: : This paper presents an overview of the procurement and deployment of COVID-19 vaccinations in Germany, Austria and Switzerland (DACH) from the success of the first vaccine trials until the end of August 2021. Data regarding vaccination procurement and deployment is presented, followed by an analysis of the challenges these countries face in improving their vaccination rates. Methods: : A review and analysis of available data from the DACH countries was conducted. Data was collected from official government sources whenever possible and supplemented by information from international databases and local reports. The data was analyzed to identify common patterns as well as divergences across the DACH region, especially as they relate to vaccine hesitancy and health policy. Results: : Following initial global supply problems, the DACH countries were largely successful at administering vaccinations to their populations. However, by the end of August 2021 their vaccination progress had plateaued. This was primarily due to vaccine hesitancy in the region, which is correlated with a multitude of complex factors. These factors need to be better understood before this issue can be effectively addressed. Unlike other countries, the DACH countries have not (yet) used financial incentives or mandates to increase vaccination rates. Conclusions: : The DACH countries displayed effective governance in their deployment of COVID-19 vaccines, but vaccine hesitancy is slowing progress. Due to various social and political factors, Germany, Austria and Switzerland have not been able to employ effective policy levers to overcome this barrier and a more nuanced strategy will have to be developed. Public Interest Summary: : Germany, Austria and Switzerland (DACH) were largely successful at procuring COVID-19 vaccine doses and administering them to their populations. After the first doses were acquired, their vaccination rates continued to steadily rise, but progress began to slow down substantially by August 2021 due in part to vaccine hesitancy. Unlike in other countries, the DACH governments have not been able to implement vaccine mandates to try and overcome this issue due to their specific political and social circumstances. A deeper understanding of the factors driving vaccine hesitancy in the region will be required before effective solutions can be found.

Improving risk-equalization in Switzerland: Effects of alternative reform proposals on reallocating public subsidies for hospitals.

The Swiss healthcare financing system is on the verge of one of its largest reforms. The Swiss parliament is currently debating how to reallocate about 20 % of total health expenditures. Swiss cantons make substantial tax-funded contributions to health expenditures by paying 55 % of hospital inpatient costs. As health insurers are fully responsible for all outpatient costs, the present system may provide unintended incentives to treat patients in inpatient settings. This paper presents and evaluates three alternative reform proposals for the reallocation of the cantonal contribution. Two proposals are currently under consideration in the Swiss parliament, suggesting either partial cost-sharing (20 %) of all healthcare costs or inclusion of cantonal contributions into the risk-equalization fund. A third option is developed in this paper, which proposes using the cantonal funds to pay a share of insurer's expenses above a high-cost threshold. The high-cost risk-sharing alternative is clearly superior: it mitigates the incentive to discriminate against sicker individuals, improves incentives for cost control, and reduces risk of loss for insurers. The paper adds results from Switzerland to an international literature on the properties of adding high-cost risk sharing to a risk equalization model.

Europe's Covid-19 outliers: German, Austrian and Swiss policy responses during the early stages of the 2020 pandemic.

OBJECTIVES: This paper presents an overview of the policy responses in Germany, Austria and Switzerland (the DACH region) during the early stages of the 2020 Covid-19 pandemic (Feb.-June 2020), which provides the context for a comparative policy analysis. This analysis provides insight into the possible implications of the policy actions taken in the region. METHODS: An in-depth review and analysis of available data from the DACH countries was conducted. Data was collected from official government sources whenever possible, and supplemented by information from international databases and local reports. The data was then analyzed to identify common patterns as well as significant divergences across the DACH region, especially in the area of health policy and technology use. RESULTS: The DACH countries faced similar epidemiological situations during the Covid-19 pandemic, and were largely successful at preventing many of the negative impacts seen across the rest of Europe. Although many differences in health systems and governance structures existed, the policy responses in all three countries managed to address some of the most important factors in containing an infectious disease outbreak of this magnitude. CONCLUSIONS: The actions taken by all three DACH countries appear to have been largely successful in reducing the health impact of Covid-19, allowing a return to normal economic activities much earlier than in neighboring countries. However, the implications of certain policies related to economic resilience and health system capacity cannot yet be fully evaluated and may even prove to have negative impacts into the future.

Extreme under and overcompensation in morbidity-based health plan payments: The case of Switzerland.

In 2020, the Swiss insurer payment model will include a set of sophisticated morbidity indicators in the form of Pharmaceutical Cost Groups (PCGs), added to a payment model currently largely based on age, gender, and a crude morbidity indicator. Adding powerful risk adjustors reduces underpayment for previously highly underpaid groups but creates a new group of the highly overpaid. We characterize the diseases and patterns of health care spending in most extremely under and overpaid in the new Swiss payment model. We define extremely under and overpaid to be those in the top and bottom 1 and .1 percentiles of the distribution of spending less payment, respectively. The under and overpaid share some of the same health conditions, among them kidney disease. The highly underpaid account for a massively disproportionate share of the unexplained variance in the new payment model. Membership in the tails of the distribution of spending residuals after risk adjustment is persistent, implying that the highly over and underpaid merit special attention in design of insurer payment models.

Long-term Effects of Managed Care.

Managed care (MC) plans have been introduced to curb the ever increasing health care costs. Many previous studies on effectiveness lacked a long-term perspective; hence, the sustainability of (possible) savings remains unclear. Moreover, because of their incentives, MC plans are susceptible to under-provision of care. Most of these possibly negative effects can only be observed in the long-term. This paper analyzes the long-term effects of MC plans on cost savings, mortality, and the use of service, using administrative data from a large Swiss health insurer. The identification is based on a propensity-score matching approach, where individuals who enter an MC plan are compared over 10 years to individuals who remain in a standard fee-for-service plan. Cost savings are substantial and sustainable, and the mortality rate is lower in MC plans. Cost savings are driven by fewer consultations and fewer days in hospital care, although the probability of visiting a provider at least once per year is similar or even higher for persons in MC plans. Copyright © 2016 John Wiley & Sons, Ltd.

Would you train me with my mental illness? Evidence from a discrete choice experiment.

BACKGROUND: Mental illness is the prime reason for the inflow into disability insurance in many countries. The integration of persons with a disability into the regular labor market is costly and in the case of mentally ill persons, particularly difficult. Supported Education and Employment - a rehabilitation method that directly places patients in a realistic work environment - has been shown to be effective in increasing competitive employment. However, it has not yet been widely implemented. AIMS OF THE STUDY: We evaluate ex-ante the willingness to participate in Supported Education and Employment and the barriers to do so from the employer's perspective. METHODS: We conducted a discrete choice experiment implemented in an online survey. The survey was carried out among all Swiss companies which provide standard dual-track vocational education and training for commercial occupations in Eastern Switzerland. We presented respondents (employees who are responsible for vocational training and/or for the selection of applicants) with a sample of five hypothetical profiles. These profiles vary along different medical diagnoses, different illness related (dys-)functions, and other characteristics that may be associated with a company's willingness to accept the candidate (such as school performance, motivation, and illness related absences). Respondents were asked whether or not they would train this person. RESULTS: 22% of the profiles are accepted. However, our results demonstrate that the hypothetical bias - which is the difference between individual saying what they would do in a hypothetical setting and what they will do when they have the opportunity - is severe. Correcting for this bias using follow-up scales ("Are you sure?") reduces the overall acceptance in our sample to 9%. Keeping in mind the response rate to our survey of 35%, overall acceptance may be as low as 3%. Non-cognitive dysfunctions (e.g. non-adherence to regulations, difficulties with contacts with others) that are related to mental disorders, are the main deterrents. Patients with psychotic disorders are particularly disadvantaged. IMPLICATIONS FOR HEALTH POLICY: Although there are no direct costs to the employer, a wide introduction of Supported Vocational Education and Training is likely to fail at the current stage with the unwillingness of companies to train people with special needs. There may be additional incentives needed, for example in form of subsidies or legal requirements. Even though our experiment has been tailored to the Swiss system, our results may also be relevant in other countries with similar dual-track education systems.