IDEAS home Printed from https://ideas.repec.org/a/eee/socmed/v84y2013icp53-60.html
   My bibliography  Save this article

Local availability of physicians' services as a tool for implicit risk selection

Author

Listed:
  • Shmueli, Amir
  • Nissan-Engelcin, Esti

Abstract

Risk adjustment of the allocated health budget to health plans plays a major role in the functioning of competitive social health insurance systems. Whenever the risk adjusted allocation is below the expected marginal cost of care for a given person, incentives for risk selection arise. Since coverage is universal, risk selection must take on implicit forms such as stinting and distorting quality of health services. One of the tools for such selection is to strategically determine the local availability of physicians based on the local population. The Israeli competitive national health insurance scheme includes an age (only)-risk adjustment. We argue that the localities' known characteristics are used by the Israeli managed care organizations (sickness funds) to adjust the availability of and accessibility to community health services. Consequently, we expect strong competition and high availability of services in healthier-than-average (and richer) towns, and weak competition and low availability of services in sicker-than-average (and poorer) towns. The empirical analysis combines data on the reception hours of physicians in five specialties and socio-economic and demographic characteristics (age, mean income, mortality rates etc.) of 60 towns in 2004, and strongly confirms that hypothesis, controlling for several other possible explanations for such findings. Such a situation clearly represents a regulation failure and an inefficient and inequitable geographic allocation of health services.

Suggested Citation

  • Shmueli, Amir & Nissan-Engelcin, Esti, 2013. "Local availability of physicians' services as a tool for implicit risk selection," Social Science & Medicine, Elsevier, vol. 84(C), pages 53-60.
    • Handle: RePEc:eee:socmed:v:84:y:2013:i:c:p:53-60
    DOI: 10.1016/j.socscimed.2013.02.004
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0277953613000774
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.socscimed.2013.02.004?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Shmueli, Amir & Bendelac, Jacques & Achdut, Leah, 2007. "Who switches sickness funds in Israel?," Health Economics, Policy and Law, Cambridge University Press, vol. 2(3), pages 251-265, July.
    2. Schokkaert, Erik & Van de Voorde, Carine, 2004. "Risk selection and the specification of the conventional risk adjustment formula," Journal of Health Economics, Elsevier, vol. 23(6), pages 1237-1259, November.
    3. Thomas G. McGuire & Jacob Glazer, 2000. "Optimal Risk Adjustment in Markets with Adverse Selection: An Application to Managed Care," American Economic Review, American Economic Association, vol. 90(4), pages 1055-1071, September.
    4. Shmueli, Amir & Chernichovsky, Dov & Zmora, Irit, 2003. "Risk adjustment and risk sharing: the Israeli experience," Health Policy, Elsevier, vol. 65(1), pages 37-48, July.
    5. Chalkley, Martin & Malcomson, James M., 2000. "Government purchasing of health services," Handbook of Health Economics, in: A. J. Culyer & J. P. Newhouse (ed.), Handbook of Health Economics, edition 1, volume 1, chapter 15, pages 847-890, Elsevier.
    6. van de Ven, Wynand P.M.M. & Beck, Konstantin & Van de Voorde, Carine & Wasem, Jurgen & Zmora, Irit, 2007. "Risk adjustment and risk selection in Europe: 6 years later," Health Policy, Elsevier, vol. 83(2-3), pages 162-179, October.
    7. Léonard, Christian & Stordeur, Sabine & Roberfroid, Dominique, 2009. "Association between physician density and health care consumption: A systematic review of the evidence," Health Policy, Elsevier, vol. 91(2), pages 121-134, July.
    8. Victor R. Fuchs, 2018. "Reflections on the Socio-Economic Correlates of Health," World Scientific Book Chapters, in: Health Economics and Policy Selected Writings by Victor Fuchs, chapter 10, pages 115-124, World Scientific Publishing Co. Pte. Ltd..
    9. Eddy van Doorslaer & Xander Koolman & Andrew M. Jones, 2004. "Explaining income‐related inequalities in doctor utilisation in Europe," Health Economics, John Wiley & Sons, Ltd., vol. 13(7), pages 629-647, July.
    10. Ellis, Randall P. & McGuire, Thomas G., 1990. "Optimal payment systems for health services," Journal of Health Economics, Elsevier, vol. 9(4), pages 375-396, December.
    11. Van de ven, Wynand P.M.M. & Ellis, Randall P., 2000. "Risk adjustment in competitive health plan markets," Handbook of Health Economics, in: A. J. Culyer & J. P. Newhouse (ed.), Handbook of Health Economics, edition 1, volume 1, chapter 14, pages 755-845, Elsevier.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Amir Shmueli, 2015. "On the calculation of the Israeli risk adjustment rates," The European Journal of Health Economics, Springer;Deutsche Gesellschaft für Gesundheitsökonomie (DGGÖ), vol. 16(3), pages 271-277, April.
    2. Withagen-Koster, Anja A. & van Kleef, Richard C. & Eijkenaar, Frank, 2023. "Predictable profits and losses in a health insurance market with risk equalization: A multiple-contract period perspective," Health Policy, Elsevier, vol. 131(C).
    3. Simón Ramírez Amaya & Adolfo J. Quiroz & Álvaro José Riascos Villegas, 2019. "Regression by clustering using metropolis-hastings," Documentos de Trabajo 18180, Quantil.
    4. Shuli Brammli-Greenberg & Jacob Glazer & Ruth Waitzberg, 2019. "Modest risk-sharing significantly reduces health plans’ incentives for service distortion," The European Journal of Health Economics, Springer;Deutsche Gesellschaft für Gesundheitsökonomie (DGGÖ), vol. 20(9), pages 1359-1374, December.
    5. Wynand P. M. M. Ven & René C. J. A. Vliet & Richard C. Kleef, 2017. "How can the regulator show evidence of (no) risk selection in health insurance markets? Conceptual framework and empirical evidence," The European Journal of Health Economics, Springer;Deutsche Gesellschaft für Gesundheitsökonomie (DGGÖ), vol. 18(2), pages 167-180, March.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Danny Wende, 2019. "Spatial risk adjustment between health insurances: using GWR in risk adjustment models to conserve incentives for service optimisation and reduce MAUP," The European Journal of Health Economics, Springer;Deutsche Gesellschaft für Gesundheitsökonomie (DGGÖ), vol. 20(7), pages 1079-1091, September.
    2. Camilo Cid & Randall P. Ellis & Verónica Vargas & Juergen Wasem & Lorena Prieto, 2015. "Global Risk-Adjusted Payment Models," Boston University - Department of Economics - Working Papers Series wp2015-021, Boston University - Department of Economics.
    3. Pilny, Adam & Wübker, Ansgar & Ziebarth, Nicolas R., 2017. "Introducing risk adjustment and free health plan choice in employer-based health insurance: Evidence from Germany," Journal of Health Economics, Elsevier, vol. 56(C), pages 330-351.
    4. Mark Stabile & Sarah Thomson, 2014. "The Changing Role of Government in Financing Health Care: An International Perspective," Journal of Economic Literature, American Economic Association, vol. 52(2), pages 480-518, June.
    5. Xu, Weiwei & van de Ven, Wynand P.M.M., 2013. "Consumer choice among Mutual Healthcare Purchasers: A feasible option for China?," Social Science & Medicine, Elsevier, vol. 96(C), pages 277-284.
    6. Karen Eggleston & Randall P. Ellis & Mingshan Lu, 2007. "Prevention and Dynamic Risk Adjustment," Boston University - Department of Economics - Working Papers Series WP2007-023, Boston University - Department of Economics.
    7. repec:hal:spmain:info:hdl:2441/3ihldo33ik9ee94procjtfki5f is not listed on IDEAS
    8. Normann Lorenz, 2017. "Using Quantile and Asymmetric Least Squares Regression for Optimal Risk Adjustment," Health Economics, John Wiley & Sons, Ltd., vol. 26(6), pages 724-742, June.
    9. Anell, Anders & Dackehag, Margareta & Dietrichson, Jens & Ellegård, Lina Maria & Kjellsson, Gustav, 2022. "Better Off by Risk Adjustment? Socioeconomic Disparities in Care Utilization in Sweden Following a Payment Reform," Working Papers 2022:15, Lund University, Department of Economics, revised 12 Mar 2024.
    10. Normann Lorenz, 2014. "Using quantile regression for optimal risk adjustment," Research Papers in Economics 2014-11, University of Trier, Department of Economics.
    11. Schokkaert, Erik & Van de Voorde, Carine, 2009. "Direct versus indirect standardization in risk adjustment," Journal of Health Economics, Elsevier, vol. 28(2), pages 361-374, March.
    12. Fleurbaey, Marc & Schokkaert, Erik, 2009. "Unfair inequalities in health and health care," Journal of Health Economics, Elsevier, vol. 28(1), pages 73-90, January.
    13. Schmid, Christian P.R. & Beck, Konstantin, 2016. "Re-insurance in the Swiss health insurance market: Fit, power, and balance," Health Policy, Elsevier, vol. 120(7), pages 848-855.
    14. Kifmann, Mathias, 2002. "Community rating in health insurance and different benefit packages," Journal of Health Economics, Elsevier, vol. 21(5), pages 719-737, September.
    15. Michele Fioretti & Hongming Wang, 2020. "Performance Pay in Insurance Markets: Evidence from Medicare," Working Papers 2020.03, International Network for Economic Research - INFER.
    16. James M. Malcomson, 2004. "Health Service Gatekeepers," RAND Journal of Economics, The RAND Corporation, vol. 35(2), pages 401-421, Summer.
    17. Keane, Michael, 2004. "Modeling Health Insurance Choices in “Competitive” Markets," MPRA Paper 55198, University Library of Munich, Germany.
    18. H. E. Frech & Peter Zweifel, 2017. "Market Socialism and Community Rating in Health Insurance," Comparative Economic Studies, Palgrave Macmillan;Association for Comparative Economic Studies, vol. 59(3), pages 405-427, September.
    19. Yujing Shen & Randall P. Ellis, 2002. "How profitable is risk selection? A comparison of four risk adjustment models," Health Economics, John Wiley & Sons, Ltd., vol. 11(2), pages 165-174, March.
    20. Galina Besstremyannaya & Sergei Golovan, 2019. "Physician’s altruism in incentive contracts: Medicare’s quality race," CINCH Working Paper Series 1903, Universitaet Duisburg-Essen, Competent in Competition and Health.
    21. Elin Johanna Gudrun Hafsteinsdottir & Luigi Siciliani, 2010. "DRG prospective payment systems: refine or not refine?," Health Economics, John Wiley & Sons, Ltd., vol. 19(10), pages 1226-1239, October.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:socmed:v:84:y:2013:i:c:p:53-60. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/wps/find/journaldescription.cws_home/315/description#description .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.