In many poor countries, over 80% of the population have experienced corrupt practices in the health sector. In rich countries, corruption takes other forms such as overbilling. The causal link between low levels of the quality of government (QoG) and population health can be either direct or indirect. Using cross-sectional data from more than 120 countries, our findings are that more of a QoG variable is positively associated with higher levels of life expectancy, lower levels of mortality rates for children and mothers, higher levels of healthy life expectancies and higher levels of subjective health feelings. In contrast to the strong relationships between the QoG variables and the health indicators, the relationship between the health-spending measures and population health are rather weak most of the time and occasionally non-existent. Moreover, for private health spending as well as for private share of total health spending, the relation to good health is close to zero or slightly negative. The policy recommendation coming out of our study to improve health levels around the world, in rich countries as well as in poor countries, is to improve the QoG and to finance health care with public, not private, money.

In 2006, the Dutch health insurance system was radically reformed to strengthen competition among health insurers as purchasers of health services. This article considers whether purchaser competition has improved efficiency in health-care provision. Although supply and price regulation still dominates the allocation of health services, purchaser competition has already significantly affected the provision of hospital care, pharmaceuticals and primary care, as well as efforts to gather and disseminate information about quality of care. From this perspective, the glass is half full. However, based on the crude performance indicators available, the reforms have not yet demonstrated significant effects on the performance of the Dutch health system. From this perspective the glass is half empty. The article concludes that the effectiveness of purchaser competition depends crucially on the success of ongoing efforts to improve performance indicators, product classification and the risk equalisation scheme.

Legislation in most countries regulates trade in poisons and highly addictive products, such as narcotics. The statements that (1) tobacco harms health and (2) causes addiction are established as facts in international and national law. Yet in Russia, and in many other countries, there is a contradiction between the open sale of this addictive poison and basic laws, such as those on product safety. Provisions in both the Russian constitution and the criminal code can be interpreted as making the sale of tobacco illegal, setting out severe penalties for those involved. Yet, remarkably, tobacco is treated quite differently from other products. In this paper, we describe the experience so far in seeking to enforce this legislation in Russia. Attempts to persuade the police to enforce the legislation have been unsuccessful, although they accept that there is a prima facie case for action but, in private, express fear of taking it. The case for action is currently being argued before the Russian Supreme Court but this could take many years to reach a conclusion. In the mean time, new legislation on the regulation of tobacco production has been passed by the State Duma, with the support of the tobacco industry, which implicitly assumes that tobacco is a lawful product, thereby creating legal confusion. We argue that the only way to redress this situation is to recognize that tobacco production and sales must be regulated in the same way as any other harmful and addictive substance.

In this paper, we characterise the risk-sharing contracts that health authorities can design when they face a regulatory decision on drug pricing and reimbursement in a context of uncertainty. We focus on two types of contracts. On the one hand, the health authority can reimburse the firm for each treated patient regardless of health outcomes (non risk-sharing). Alternatively, the health authority can pay for the drug only when the patient is cured (risk-sharing contract). The optimal contract depends on the trade-off between the monitoring costs, the marginal production cost and the utility derived from treatment. A non-risk-sharing agreement will be preferred by the health authority, if patients who should not be treated impose a relatively low cost to the health system. When this cost is high, the health authority would prefer a risk-sharing agreement for relatively low monitoring costs.

This article comments on Schut and van de Ven's overview of the results of purchaser competition in Dutch health care, which concludes that the glass can be seen as half full or half empty. Although it is true that results have been achieved, we believe that the evidence is incomplete and in some respects flimsy. More importantly, however, Schut and van de Ven neglect the political context of the market reform introduced in 2006. The reform is far from finished and there has been a constant need for political compromise. Optimism about the market's potential also seems to be on the wane. Several insurer and provider initiatives have provoked political resistance. As a result, there are good reasons to argue that the reform's future is uncertain.

In 2007, a new wave of local reforms involving choice for the population and privatisation of providers was initiated in Swedish primary care. Important objectives behind reforms were to strengthen the role of primary care and to improve performance in terms of access and responsiveness. The purpose of this article was to compare the characteristics of the new models and to discuss changes in financial incentives for providers and challenges regarding governance from the part of county councils. A majority of the models being introduced across the 21 county councils can best be described as innovative combinations between a comprehensive responsibility for providers and significant degrees of freedom regarding choice for the population. Key financial characteristics of fixed payment and comprehensive financial responsibility for providers may create financial incentives to under-provide care. Informed choices by the population, in combination with reasonably low barriers for providers to enter the primary care market, should theoretically counterbalance such incentives. To facilitate such competition is indeed a challenge, not only because of difficulties in implementing informed choices but also because the new models favour large and/or horizontally integrated providers. To prevent monopolistic behaviour, county councils may have to accept more competition as well as more governance over clinical practice than initially intended.

Policy debate about funding criteria for drugs used to treat rare, orphan diseases is gaining prominence. This study presents evidence from a discrete choice experiment using a convenience sample of university students to investigate individual preferences regarding public funding for drugs used to treat rare diseases and common diseases. This pilot study finds that: other things equal, the respondents do not prefer to have the government spend more for drugs used to treat rare diseases; that respondents are not willing to pay more per life year gained for a rare disease than a common disease; and that respondents weigh relevant attributes of the coverage decisions (e.g. costs, disease severity and treatment effectiveness) similarly for both rare and common diseases. The results confirm the importance of severity and treatment effectiveness in preferences for public funding. Although this is the first study of its kind, the results send a cautionary message regarding the special treatment of orphan drugs in coverage decision-making.

In this paper, we first deal with the rationale of risk adjustment and risk equalization in health insurance markets. Then we discuss the state of the art concerning the application of risk adjustment and risk equalization in practice. Finally, we focus on: What needs to be done?