We introduce new risk groups to a standard capitation formula and evaluate risk selection incentives of insurers. The study uses a unique data set of almost 24 million affiliates to Government's mandatory health insurance system. This data set is very rich in the sense of reporting all claims...

Defining optimal capital requirements for health insurers is a matter of interest for policy-makers. They determine the insolvency probability of health insurers and the minimum number of enrolees in order to keep insolvency under control. In this paper we develop a methodology for estimating...

We evaluate, in terms of efficiency and selection incentives, four different ex post risk sharing mechanisms. Outlier risk sharing (ORS), proportional risk sharing (PRS), risk sharing for high costs (RSHC) and risk sharing for high risks. Our results suggest that the best mechanism in terms of...