Table 3.

Mean (predicted) spending in euros under risk equalization without a high-risk pool, the threshold for compensation and the percentage of total costs needed to finance the high-risk pool for five different pool sizes (i.e., top-1% to top-5% of predicted residual spending)

	High-risk pools based on predicted residual spending from the random forest model
	Top 1%	Top 2%	Top 3%	Top 4%	Top 5%
Mean spending	12,730	10,826	10,097	9571	9280
Mean spending predicted by the risk-equalization model	10,371	9320	8755	8440	8194
Threshold	12,961	18,066	20,408	23,706	23,807
HRP financing costs as percentage of total spending in test sample	0.96%	1.2%	1.6%	1.8%	2.2%

Note: all spending is in euros. Results are based on test sample ( N  = 115,473)