Optimal Ex Post Risk Adjustment in Markets with Adverse Selection

Anastasios Dosis

No WP1903, ESSEC Working Papers from ESSEC Research Center, ESSEC Business School

Abstract: This paper studies general health insurance markets. It proposes an ex post risk adjustment scheme that discourages risk selection and promotes efficient competition. Under the proposed risk adjustment scheme, the regulator engages in transfers that are conditional on the ex post profits of insurers. The risk adjustment scheme is entirely budget balanced, as it does not call for government subsidies, and requires the regulator to hold minimal information to implement it. Equilibrium is shown to exist and be efficient in any environment with a finite number of types and states even if single-crossing is not satisfied.

Keywords: Risk adjustment; Efficiency; Risk selection; Health insurance (search for similar items in EconPapers)
JEL-codes: D82 D86 I10 I13 I18 (search for similar items in EconPapers)
Pages: 29 pages
Date: 2019-02
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

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Related works:
Journal Article: Optimal ex post risk adjustment in markets with adverse selection (2019)
Working Paper: Optimal Ex Post Risk Adjustment in Markets with Adverse Selection * (2019)
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Persistent link: https://EconPapers.repec.org/RePEc:ebg:essewp:dr-19003

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