EconPapers    
Economics at your fingertips  
 

Ignoring small predictable profits and losses: a new approach for measuring incentives for cream skimming

Erik van Barneveld (), Leida Lamers (), René van Vliet () and Wynand van de Ven ()

Health Care Management Science, 2000, vol. 3, issue 2, 140 pages

Abstract: Under inadequate capitation formulae competing health insurers have an incentive for cream skimming, i.e., the selection of enrollees whom the insurer expects to be profitable. When evaluating different capitation formulae, previous studies used various indicators of incentives for cream skimming. These conventional indicators are based on all actual profits and losses or on all predictable profits and losses. For the latter type of indicators, this paper proposes, as a new approach, to ignore the small predictable profits and losses. We assume that this new approach provides a better indication of the size of the cream skimming problem than the conventional one, because an insurer has to take into account its costs of cream skimming and the (statistical) uncertainties about the net benefits of cream skimming. Both approaches are applied in theoretical and empirical analyses. The results show that, if our assumption is right, the problem of cream skimming is overestimated by the conventional ways of measuring incentives for cream skimming, especially in the case of relatively good capitation formulae. Copyright Kluwer Academic Publishers 2000

Date: 2000
References: Add references at CitEc
Citations: View citations in EconPapers (15) Track citations by RSS feed

Downloads: (external link)
http://hdl.handle.net/10.1023/A:1019029004807 (text/html)
Access to full text is restricted to subscribers.

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:kap:hcarem:v:3:y:2000:i:2:p:131-140

Ordering information: This journal article can be ordered from
http://www.springer.com/journal/10729

DOI: 10.1023/A:1019029004807

Access Statistics for this article

Health Care Management Science is currently edited by Yasar Ozcan

More articles in Health Care Management Science from Springer
Bibliographic data for series maintained by Sonal Shukla () and Springer Nature Abstracting and Indexing ().

 
Page updated 2022-05-12
Handle: RePEc:kap:hcarem:v:3:y:2000:i:2:p:131-140