Risk equalization and prevention

Abstract Many countries with a competitive health insurance market have implemented a risk equalization system with health-based risk adjusters. An often-heard argument is that health-based equalization payments create a penalty on prevention and health-improving activities, because an insurer that improves its members’ health status by effective prevention and good quality care will receive lower future revenues. Eggleston et al. (Can. J. Economics/Revue Canadienne d’economique. 45(4), 1586–160