Abstract:

The Chilean health care system is highly inefficient and inequitable due to the segmentation between the public insurer (FONASA) and the private insurers (ISAPREs). One of its main problems is that the two sectors do not share their risk pool which allows ISAPREs to risk select its beneficiaries. Risk selection behaviour has been addressed in other countries with compensation funds and risk adjustment mechanisms. Chile currently has a compensation fund only between ISAPREs (excludes FONASA) for the limited health package (GES) that uses a demographic cell model with sex and age groups to risk adjust. We simulate this reallocation of resource and conclude that it has not been able to not reduce nor resolve the risk selection problem. Hence, we include FONASA in the compensation fund, we expand the benefit package, and use basically two models to risk adjust: first, a demographic model; and second, a diagnosis-based model. Results show that a compensation fund that includes ISAPREs and FONASA with a more comprehensive benefit package is necessary to reduce risk selection. On the other hand, and in line with the literature, the comparison across models shows that the models’ ability to predict real costs increases from the demographic cell model to the DxCG diagnosis-based model. In sum, the policy implications to reduce risk selection and its consequences are: the compensation fund should include the high risks in FONASA with the low risks in ISAPREs; the benefits package should be more comprehensive than the GES package; and that risk adjustment should include more adjusters like diagnosis to increase its ability to predict real costs.