Risk adjustment in the Netherlands; an analysis of insurers' health care expenditures

As of 2006, the Dutch healthcare system will be run by regulated competition. An important part of regulated competition is a system of risk adjustment. This paper presents an empirical analysis of the effects of risk adjustment in the Dutch social health insurance system covering the years 1991-2001. By comparing insurers' health care expenditures with their risk adjusted premiums, our analysis estimates the impact of risk adjustment over a number of years. Results indicate that the risk-adjustment system has improved substantially. Whereas in the beginning of the nineties prospective risk adjustment could explain about 20% of the variation in health care expenditure differentials between insurers, this figure rose to 55% in 2001. The explanation of the same variation after retrospective payments did not show a clear upward or downward trend, and has varied since 1995 around 85%. The remaining variation in insurers' health care expenditure differentials are determined more by structural than random factors. One such factor may be related to the low ex-ante projections of the government's total health care expenditures, which favour insurers with a population of relatively good health risks. Results show that new entrants in the Dutch health insurance market had significantly lower health care expenditures. Furthermore, economies of scale do not seem to have played a role during the sample period: the expenditures of large insurers were not significantly lower than those of the smaller insurers.

What are natural concepts? A design perspective

Conceptual spaces have become an increasingly popular modeling tool in cognitive psychology. The core idea of the conceptual spaces approach is that concepts can be represented as regions in similarity spaces. While it is generally acknowledged that not every region in such a space represents a natural concept, it is still an open question what distinguishes those regions that represent natural concepts from those that do not. The central claim of this paper is that natural concepts are represented by the cells of an optimally designed similarity space

From probabilities to categorical beliefs: Going beyond toy models

According to the Lockean thesis, a proposition is believed just in case it is highly probable. While this thesis enjoys strong intuitive support, it is known to conflict with seemingly plausible logical constraints on our beliefs. One way out of this conflict is to make probability 1 a requirement for belief, but most have rejected this option for entailing what they see as an untenable skepticism. Recently, two new solutions to the conflict have been proposed that are alleged to be non-skeptical. We compare these proposals with each other and with the Lockean thesis, in particular with regard to the question of how much we gain by adopting any one of them instead of the probability 1 requirement, that is, of how likely it is that one believes more than the things one is fully certain of

Delving deeper into color space

So far, color-naming studies have relied on a rather limited set of color stimuli. Most importantly, stimuli have been largely limited to highly saturated colors. Because of this, little is known about how people categorize less saturated colors and, more generally, about the structure of color categories as they extend across all dimensions of color space. This article presents the results from a large Internet-based color-naming study that involved color stimuli ranging across all available chroma levels in Munsell space. These results help answer such questions as how English speakers name a more complex color set, whether English speakers use so-called basic color terms (BCTs) more frequently for more saturated colors, how they use non-BCTs in comparison with BCTs, whether non-BCTs are highly consensual in less saturated parts of the solid, how deep inside color space basic color categories extend, or how they behave on the chroma dimension

Truth approximation, social epistemology, and opinion dynamics

This paper highlights some connections between work on truth approximation and work in social epistemology, in particular work on peer disagreement. In some of the literature on truth approximation, questions have been addressed concerning the efficiency of research strategies for approximating the truth. So far, social aspects of research strategies have not received any attention in this context. Recent findings in the field of opinion dynamics suggest that this is a mistake. How scientists exchange and take into account information about each others’ beliefs may greatly influence the accuracy and speed with which the scientific community as a whole approximates the truth. On the other hand, social epistemologists concerned with peer disagreement have so far neglected the question of how practices of responding to disagreements with peers fare with respect to the goal of approximating the truth. Again, work on opinion dynamics shows that this may be a mistake, and that how we ought to respond to disagreements with our peers may depend on the specific purposes of our investigations

Local strong D-Monotonicity of the Kalai-Smorodinsky and Nash bargaining solution

bargaining

Health plan pricing behaviour and managed competition

In the Dutch social health insurance scheme, health plans operate in a managed competition framework. Essential features of this framework are risk adjustment, open enrolment and community rating. The objective is to study how health plans determine their community rated premiums. Using a panel data set for all health plans operating in the Dutch social health insurance market over the period 1996-2004, we estimate a premium model to determine which factors explain the price setting behaviour of health plans. Our empirical results indicate that competition did not play a major role in premium setting by health plans. We find that financial stability rather than profit maximisation offers the best explanation for health plan pricing behaviour. The forecast of next year's health-care expenditure by the government and the adjusted forecast by the insurers' association play a major role in health plans' pricing decisions. The introduction of a national health insurance scheme in 2006 urged all citizens to reconsider their health plan choice. The threat of losing customers had a profound impact on health plans' pricing behaviour. In sharp contrast to the period 1996-2005, in 2006 competition seems to play a dominant role in insurers' pricing decisions. Whether this will be a temporary or a lasting phenomenon is hard to predict.

On the Sensitivity Matrix of the Nash Bargaining Solution

In this note we derive the sensitivity matrix of the Nash bargaining solution w.r.t. the disagreement point d.This first order derivative is completely specified in terms of the Pareto frontier function.We show that whenever one player increases his threatpoint always at least one player will loose utility: i.e. the dual result of Pareto optimality.Furthermore,the dmonotonicity property is easily re-established from this matrix.This matrix also enables us to consider the concept of local strong d-monotonicity.That is,under which conditions on the Pareto frontier function . an infinitesimal increase of di,while for each j = i, dj remains constant,it happens that agent i is the only one who s payoff increases.We show that for the Nash bargaining solution this question is closely related to non-negativity of the Hamiltonian matrix of . at the solution.Nash bargaining solution;d-monotonicity;diagonally dominant Stieltjes matrix