During the 1990s the policy of introducing managed competition principles to health insurance markets meant that individuals were given the freedom to choose their insurer. However, this was predicated on achieving risk solidarity, and thus equity, between different generations and within the population. In part, this meant encouraging competition based on efficiency and discouraging insurers making profits on the basis of risk selection.

Risk equalisation is the mechanism that is used to ensure risk solidarity principles apply. In case of premium regulation (e.g. mandatory community rating) risk equalization prevents competition from occurring on the basis of risk selection and to foster competition based on costs and quality of care. Without risk equalisation inefficient competition might arise where the incentive might be for insurers to target preferred risk groups rather than, for example, manage costs, provide benefits appropriate to individuals' needs or stifle innovation.

Many of the countries using risk equalisation (adjustment) systems have a mandatory health insurance market as the main source of health care financing and much of the academic discussion has heretofore focused on these countries. In this session, authors from three countries (Australia, Ireland and South Africa) discuss the role and the impact of risk equalisation in their voluntary health insurance markets.

The subject matter is of topical importance in many countries that are attempting to either explicitly or implicitly bring about elements of 'managed competition' to their health insurance markets. In addition, to the historically wealthier countries of Western Europe (e.g. The Netherlands, Germany, Ireland, Australia), the topic is of importance to countries who have moved or are moving from centralised economic model to a more market oriented system (e.g. Slovenia, Czech Republic, Slovakia).

Furthermore, the topic is becoming increasingly important in countries with a large voluntary health insurance market where managed competition reform has been proposed to reduce incentives for risk-rating and risk-selection (e.g. United States). The topic will be of interest in developing countries who have existing private voluntary insurance systems for the wealthier parts of the population and intend to develop a mandatory national or social health insurance system in the future.