This article reviews the basic theoretical model of risk adjustment (Glazer/McGuire 2000) with a special focus on a coherent presentation of the main results. With adverse selection a regulator pursuing efficiency and solidarity objectives will need a risk adjustment scheme acting on a signal to...

In Germany, there is an ongoing debate on how to finance the statutory health insurance (SHI). Proposals include a "civic insurance" with a contribution rate drawn on a broader base and capitated payments. This debate will not subside with the recently issued white paper on health care reform,...