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The costs of health care in the last year of life are a subject of debate and myth. Expensive interventions at the end of life often are blamed for the rapid increase in health care spending, but evidence about the existence of such exceptionally high expenditures at the end of life is rare and faulty. This investigation examines the development and composition of health care costs at the end of life for all age groups in The Netherlands. In contrast with earlier studies, this research analyzes both acute care (cure) and long-term care (care) costs. As an alternative for the frequently used concept of calendar years, we employed the concept of life years for calculating the costs at the end of life. We found that when life approaches its end, health care expenditures indeed rise sharply, especially in the last months. However, when we compared total cure costs in the last year of life to the total cure costs for the entire population, we concluded that the end-of-life share was only about 10%. Results of this study show that interventions to reduce costs in the last year of life will have only a modest impact compared to the total health care budget.

AbstractÐRisk-adjusted capitation payments (RACPs) to competing health insurers are an essential element of market-oriented health care reforms in many countries. RACPs based on demographic variables only are insucient, because they leave ample room for cream skimming. However, the implementation of improved RACPs does not appear to be straightforward. A solution might be to supplement imperfect RACPs with a form of mandatory pooling that reduces the incentives for cream skimming. In a previous paper it was concluded that high-risk pooling (HRP), is a promising supplement to RACPs. The purpose of this paper is to compare HRP with two other main variants of mandatory pooling. These variants are called excess-of-loss (EOL) and proportional pooling (PP). Each variant includes ex post compensations to insurers for some members which depend to various degrees on actually incurred costs. Therefore, these pooling variants reduce the incentives for cream skimming which are inherent in imperfect RACPs, but they also reduce the incentives for eciency and cost containment. As a rough measure of the latter incentives we use the percentage of total costs for which an insurer is at risk. This paper analyzes which of the three main pooling variants yields the greatest reduction of incentives for cream skimming given such a percentage. The results show that HRP is the most eective of the three pooling variants. #

In many countries, competing health plans receive capitation payments from a sponsor, whether government or a private employer. All capitation payment methods are far from perfect and have raised concerns about risk selection. Paying health plans partly on the basis of capitation and partly on the basis of actual costs ("risk sharing") reduces plans' incentives for selection but sacrifices some incentives for efficiency. This paper summarizes our empirical research on Dutch health plans with respect to various forms of risk sharing. All sponsors can improve their payment systems by either implementing or changing their form of risk sharing.