Designing New Systems Through Risk Adjustment

Abstract

Public health insurance for Japan’s working generations is divided into several systems. There are disparities among these systems in terms of their state of financing due to differences in the income level of premium payers. The state of financing of National Health Insurance is particularly problematic. Risk adjustment can adjust disparities in premiums without hindering the management efforts of insurers. This would make it possible to adjust disparities in premiums arising from factors such as the age structure and income level of subscribers, which cannot be controlled by insurers, while disparities due to other factors would still occur. The introduction of risk adjustment to the National Health Insurance system could be expected to resolve the system’s financial problems.