Integrating risk adjustment and enrollee premiums in health plan payment

Thomas G. McGuire, Jacob Glazer (), Joseph Newhouse, Sharon-Lise Normand, Julie Shi (), Anna D. Sinaiko and Samuel H. Zuvekas

Journal of Health Economics, 2013, vol. 32, issue 6, 1263-1277

Abstract: In two important health policy contexts – private plans in Medicare and the new state-run “Exchanges” created as part of the Affordable Care Act (ACA) – plan payments come from two sources: risk-adjusted payments from a Regulator and premiums charged to individual enrollees. This paper derives principles for integrating risk-adjusted payments and premium policy in individual health insurance markets based on fitting total plan payments to health plan costs per person as closely as possible. A least squares regression including both health status and variables used in premiums reveals the weights a Regulator should put on risk adjusters when markets determine premiums. We apply the methods to an Exchange-eligible population drawn from the Medical Expenditure Panel Survey (MEPS).

Keywords: Risk adjustment; Premiums; Health insurance; Exchanges; Medicare (search for similar items in EconPapers)
JEL-codes: I13 I18 (search for similar items in EconPapers)
Date: 2013
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (26)

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S0167629613000714
Full text for ScienceDirect subscribers only

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eee:jhecon:v:32:y:2013:i:6:p:1263-1277

DOI: 10.1016/j.jhealeco.2013.05.002

Access Statistics for this article

Journal of Health Economics is currently edited by J. P. Newhouse, A. J. Culyer, R. Frank, K. Claxton and T. McGuire

More articles in Journal of Health Economics from Elsevier
Bibliographic data for series maintained by Catherine Liu ().