Capping risk adjustment?
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In: Journal of Health Economics, Vol. 29, No. 4, 01.07.2010, p. 499-507.
Research output: Journal contributions › Journal articles › Research › peer-review
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TY - JOUR
T1 - Capping risk adjustment?
AU - Eugster, Patrick
AU - Sennhauser, Michèle
AU - Zweifel, Peter
PY - 2010/7/1
Y1 - 2010/7/1
N2 - When premiums are community-rated, risk adjustment (RA) serves to mitigate competitive insurers' incentive to select favorable risks. However, unless fully prospective, it also undermines their incentives for efficiency. By capping its volume, one may try to counteract this tendency, exposing insurers to some financial risk. This in term runs counter the quest to refine the RA formula, which would increase RA volume. Specifically, the adjuster, "Hospitalization or living in a nursing home during the previous year" will be added in Switzerland starting 2012. This paper investigates how to minimize the opportunity cost of capping RA in terms of increased incentives for risk selection.
AB - When premiums are community-rated, risk adjustment (RA) serves to mitigate competitive insurers' incentive to select favorable risks. However, unless fully prospective, it also undermines their incentives for efficiency. By capping its volume, one may try to counteract this tendency, exposing insurers to some financial risk. This in term runs counter the quest to refine the RA formula, which would increase RA volume. Specifically, the adjuster, "Hospitalization or living in a nursing home during the previous year" will be added in Switzerland starting 2012. This paper investigates how to minimize the opportunity cost of capping RA in terms of increased incentives for risk selection.
KW - Health sciences
KW - Adult
KW - Aged
KW - Aged, 80 and over
KW - Efficiency, Organizational
KW - Female
KW - Government Regulation
KW - Hospitalization
KW - Humans
KW - Insurance Selection Bias
KW - Insurance, Health
KW - Male
KW - Managed Competition
KW - Middle Aged
KW - Motivation
KW - Nursing Homes
KW - Questionnaires
KW - Risk Adjustment
KW - Switzerland
KW - Young Adult
U2 - 10.1016/j.jhealeco.2010.04.001
DO - 10.1016/j.jhealeco.2010.04.001
M3 - Journal articles
C2 - 20462647
VL - 29
SP - 499
EP - 507
JO - Journal of Health Economics
JF - Journal of Health Economics
SN - 0167-6296
IS - 4
ER -