Prague Economic Papers 2010, 19(3):236-250 | DOI: 10.18267/j.pep.374

Improving Risk Adjustment in the Czech Republic

Radovan Chalupka
IES, Faculty of Social Sciences, Charles University in Prague, Opletalova 26, CZ - 110 00, Prague 1 (chalupka@fsv.cuni.cz).

This paper analyses possible options how to improve the risk adjustment of the health insurance system in the Czech Republic. From the possible options it argues for including pharmaceutical cost groups (PCGs) as additional risk factors since it is an improvement that can be implemented almost instantaneously. On real data from an anonymous sickness fund it confirms that predictive performance of PCGs models is consistently better than the performance of the demographic model that is currently used. The study also describes and examines the Czech health insurance market and implications of proposed changes of policy makers. Based on experience from other countries we point to a problem of risk selection if the changes are not accompanied by a tighter regulation, specifically in the form of improved risk adjustment formula.

Keywords: Czech Republic, health insurance, risk adjustment, pharmaceutical cost groups
JEL classification: C10, D82, G22, I10, I11, I18

Published: January 1, 2010  Show citation

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Chalupka, R. (2010). Improving Risk Adjustment in the Czech Republic. Prague Economic Papers, 19(3), 236-250. doi: 10.18267/j.pep.374
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