Bayesian Estimates of the Regional Costs in Public Health System of the Czech Republic

Unlike commercial insurance premiums, monthly contribution to the health insurance system depends mainly on the income of the insured person. Amount of revenue of the health insurance companies, however, should be sufficient to cover all costs, especially the cost of health care. Health care costs vary. The paper presents the process of the health care costs estimation in the regions of the Czech Republic by applying the empirical Bayesian credibility models. The credibility costs combines individual regional experience and collective experience through the credibility factor. The credibility factor expresses the level of confidence in individual risk experience and takes into account heterogeneity of portfolio and amount of experience within the portfolio. This paper presents the differences of the health care costs among the Czech regions. Computation of these costs is based on real data. Estimated values of health care costs for the following time period are gained using the Buhlmann Straub model.