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The European Journal of Health Economics

, Volume 20, Issue 7, pp 1079–1091 | Cite as

Spatial risk adjustment between health insurances: using GWR in risk adjustment models to conserve incentives for service optimisation and reduce MAUP

  • Danny WendeEmail author
Original Paper

Abstract

This paper presents a new approach to deal with spatial inequalities in risk adjustment between health insurances. The shortcomings of non-spatial and spatial fixed effects in risk adjustment models are analysed and opposed against spatial kernel estimators. Theoretical and empirical evidence suggests that a reasonable choice of the spatial kernel could limit the spatial uncertainty of the modifiable area unit problem under heavy-tailed claims data, leading to more precise predictions and economically positive incentives on the healthcare market. A case study of the German risk adjustment shows a spatial risk spread of 86 Euro p.c., leading to incentives for spatial risk selection. The proposed estimator eliminates this issue and conserves incentives for services optimisation.

Keywords

Health insurance Health care utilisation Risk adjustment Geographic variations Germany 

JEL Classification

H5 I18 

Notes

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Copyright information

© Springer-Verlag GmbH Germany, part of Springer Nature 2019

Authors and Affiliations

  1. 1.Wissenschaftliches Institut für Gesundheitsökonomie und Gesundheitssystemforschung (WIG2 GmbH)LeipzigGermany

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