Risk Adjustment for Health Insurance: Theory and Implications
AbstractThis paper explores the potential for welfare-improving public risk adjustment in health insurance markets characterized by adverse selection. The optimal risk adjustment system is derived in a theoretical model under a range of assumptions regarding government information and market equilibrium. Special attention is focused on the interaction between risk adjustment and the private transfers that can occur in markets characterized by adverse selection. Risk adjustment has the potential to improve both equity and efficiency; however, it can also have the effect of crowding out private transfers. Copyright 1998 by Kluwer Academic Publishers
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Bibliographic InfoArticle provided by Springer in its journal Journal of Risk and Uncertainty.
Volume (Year): 17 (1998)
Issue (Month): 2 (November)
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Web page: http://www.springerlink.com/link.asp?id=100299
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- 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.
- Karen Eggleston & Randall P. Ellis & Mingshan Lu, 2007. "Prevention and Dynamic Risk Adjustment," Working Papers 2007-06, Department of Economics, University of Calgary, revised 26 Oct 2007.
- Selden, Thomas M., 1999. "Premium subsidies for health insurance: excessive coverage vs. adverse selection," Journal of Health Economics, Elsevier, vol. 18(6), pages 709-725, December.
- 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.
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