infonet-economy

Switzerland introduced managed care options in its social health insurance market in order to contain health care expenditures (HCE). These capitated Managed Care plans reduce costs through gatekeeping, internal guidelines, promoting generic substitution etc. Given the cost benefits of about 62%, the crucial question for both health insurers and the legislator is whether MC plans enhance efficiency or benefit from self-selection. Up to now, only one paper by Lehmann and Zweifel has analysed this question by applying Swiss data (and appropriate econometric tools). Their breakdown of the 62% cost benefit was 40% efficiency gains and 22% selection effect.
Our research applied a matching technique to estimate the efficiency gains. All 55,165 MC pol-icy holders of a given fund, across 18 different MC plans, formed the starting point. The sam-ple was divided into 442 risk classes according to demographics, place of residence, chronic conditions etc. Out of 900,000 insured within the same fund who did not choose MC plans but had identical coverage and free access to providers, we drew “twin samples” of identical size and risk structure as the MC plans (according to the 442 risk classes) and calculated their aver-age HCE. We re-sampled up to 60 times per plan and calculated the average HCE of the 60 averages. This average of averages was compared with the simple average of HCE in the MC plan, yielding the efficiency gain. The same average of averages compared with the simple average of all non-MC policy holders living in the same area indicates the selection effect. All calculations were done separately for each MC plan and two different years (2006 and 2007).
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Our approach reveals efficiency gains of only 8.7% (across all plans) and selection effects of about 52%. However, the different plans vary substantially, and our analysis also identifies a best practice plan with 18.5% efficiency gains. The goal of this study was also to inspire those plans below the benchmark to copy the best practice tools of the leading MC plans.