This file is part of IDEAS, which uses RePEc data


[ Papers | Articles | Software | Books | Chapters | Authors | Institutions | JEL Classification | NEP reports | Search | New papers by email | Author registration | Rankings | Volunteers | FAQ | Blog | Help! ]

Prevention and Dynamic Risk Adjustment

Author info | Abstract | Publisher info | Download info | Related research | Statistics
Author Info
Karen Eggleston () (UCLA International Institute)
Randall P. Ellis () (Department of Economics, Boston University)
Mingshan Lu () (University of Calgary)

Additional information is available for the following registered author(s):

Abstract

Risk adjustment deters selection and helps to assure fair and efficient payments among health insurers or capitated provider groups. However, since conventional risk adjustment allocates funds among insurers or regions according to current population health status, it does not reward — indeed, it penalizes — provider preventive efforts that improve population health. This prevention penalty of risk adjustment will become increasingly salient as inter-related trends converge — aging societies, chronic disease epidemics, use of market-based incentives and wider adoption of conventional risk adjustment. We develop a theoretical model of selection and prevention demonstrating this problem with conventional risk adjustment and suggesting a simple alternative that restores incentives for optimal prevention. Dynamic risk adjustment combines conventional risk adjustment with pay-for-performance for prevention.

Download Info
To download:

If you experience problems downloading a file, check if you have the proper application to view it first. Information about this may be contained in the File-Format links below. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.

File URL: http://people.bu.edu/ellisrp/EllisPapers/2007_EgglestonEllisLu_PreventionDynamicRA25pages.pdf
File Format: application/pdf
File Function:
Download Restriction: no

Publisher Info
Paper provided by Boston University - Department of Economics in its series Boston University - Department of Economics - Working Papers Series with number WP2007-023.

Download reference. The following formats are available: HTML (with abstract), plain text (with abstract), BibTeX, RIS (EndNote, RefMan, ProCite), ReDIF
Length: 25pages
Date of creation: Mar 2007
Date of revision:
Handle: RePEc:bos:wpaper:wp2007-023

Contact details of provider:
Postal: 270 Bay State Road, Boston, MA 02215
Phone: 617-353-4389
Fax: 617-353-444
Web page: http://www.bu.edu/econ/
More information through EDIRC

For technical questions regarding this item, or to correct its listing, contact: (Ashley Seamans).

Related research
Keywords: prevention; health promotion; risk adjustment; pay-for-performance;

Other versions of this item:

Find related papers by JEL classification:
I1 - Health, Education, and Welfare - - Health

References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:

  1. Marchand, Maurice & Sato, Motohiro & Schokkaert, Erik, 2003. " Prior Health Expenditures and Risk Sharing with Insurers Competing on Quality," RAND Journal of Economics, The RAND Corporation, vol. 34(4), pages 647-69, Winter.
  2. Erik Schokkaert & Geert Dhaene & Carine Van De Voorde, 1998. "Risk adjustment and the trade-off between efficiency and risk selection: an application of the theory of fair compensation," Health Economics, John Wiley & Sons, Ltd., vol. 7(5), pages 465-480.
  3. Burgess Jr., James F. & Christiansen, Cindy L. & Michalak, Sarah E. & Morris, Carl N., 2000. "Medical profiling: improving standards and risk adjustments using hierarchical models," Journal of Health Economics, Elsevier, vol. 19(3), pages 291-309, May. [Downloadable!] (restricted)
  4. Nolan Miller & Karen Eggleston & Richard Zeckhauser, 2006. "Provider choice of quality and surplus," International Journal of Health Care Finance and Economics, Springer, vol. 6(2), pages 103-117, June. [Downloadable!] (restricted)
    Other versions:
  5. Chalkley, Martin & Malcomson, James M., 1998. "Contracting for health services when patient demand does not reflect quality," Journal of Health Economics, Elsevier, vol. 17(1), pages 1-19, January. [Downloadable!] (restricted)
    Other versions:
  6. Altman, Daniel & Cutler, David M & Zeckhauser, Richard J, 1998. "Adverse Selection and Adverse Retention," American Economic Review, American Economic Association, vol. 88(2), pages 122-26, May. [Downloadable!] (restricted)
  7. Avi Dor, 2004. "Optimal Price Rules, Administered Prices and Suboptimal Prevention: Evidence from a Medicare Program," Journal of Regulatory Economics, Springer, vol. 25(1), pages 81-104, January. [Downloadable!] (restricted)
  8. Selden, Thomas M, 1998. "Risk Adjustment for Health Insurance: Theory and Implications," Journal of Risk and Uncertainty, Springer, vol. 17(2), pages 167-79, November. [Downloadable!] (restricted)
  9. 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. [Downloadable!] (restricted)
  10. Frederik T. Schut & Wynand P. M. M. Van de Ven, 2005. "Rationing and competition in the Dutch health-care system," Health Economics, John Wiley & Sons, Ltd., vol. 14(S1), pages S59-S74. [Downloadable!]
  11. Robert Nuscheler & Thomas Knaus, 2005. "Risk selection in the German public health insurance system," Health Economics, John Wiley & Sons, Ltd., vol. 14(12), pages 1253-1271. [Downloadable!]
  12. Anupa Bir & Karen Eggleston, 2006. "Measuring Selection Incentives in Managed Care: Evidence from the Massachusetts State Employee Insurance Program," Discussion Papers Series, Department of Economics, Tufts University 0605, Department of Economics, Tufts University. [Downloadable!]
    Other versions:
  13. Croxson, B. & Propper, C. & Perkins, A., 2001. "Do doctors respond to financial incentives? UK family doctors and the GP fundholder scheme," Journal of Public Economics, Elsevier, vol. 79(2), pages 375-398, February. [Downloadable!] (restricted)
  14. Barros, Pedro Pita, 2003. "Cream-skimming, incentives for efficiency and payment system," Journal of Health Economics, Elsevier, vol. 22(3), pages 419-443, May. [Downloadable!] (restricted)
  15. Shen, Yujing & Ellis, Randall P., 2002. "Cost-minimizing risk adjustment," Journal of Health Economics, Elsevier, vol. 21(3), pages 515-530, May. [Downloadable!] (restricted)
    Other versions:
  16. Pedro Barros & Xavier Martinez-Giralt, 2003. "Preventive Health Care and Payment Systems," Topics in Economic Analysis & Policy, Berkeley Electronic Press, vol. 3(1), pages 1115-1115. [Downloadable!] (restricted)
  17. Glazer, Jacob & McGuire, Thomas G., 2006. "Optimal quality reporting in markets for health plans," Journal of Health Economics, Elsevier, vol. 25(2), pages 295-310, March. [Downloadable!] (restricted)
  18. Eggleston, Karen, 2005. "Multitasking and mixed systems for provider payment," Journal of Health Economics, Elsevier, vol. 24(1), pages 211-223, January. [Downloadable!] (restricted)
  19. David M. Cutler, 2002. "Equality, Efficiency, and Market Fundamentals: The Dynamics of International Medical-Care Reform," Journal of Economic Literature, American Economic Association, vol. 40(3), pages 881-906, September.
  20. 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. [Downloadable!] (restricted)
  21. 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. [Downloadable!]
  22. Byrne, Margaret M. & Thompson, Peter, 2001. "Screening and preventable illness," Journal of Health Economics, Elsevier, vol. 20(6), pages 1077-1088, November. [Downloadable!] (restricted)
  23. Frank, Richard G. & Glazer, Jacob & McGuire, Thomas G., 2000. "Measuring adverse selection in managed health care," Journal of Health Economics, Elsevier, vol. 19(6), pages 829-854, November. [Downloadable!] (restricted)
Full references

Statistics
Access and download statistics

Did you know? IDEAS also covers the most complete directory of Economics departments and institutes, EDIRC.

This page was last updated on 2009-11-4.

This information is provided to you by IDEAS at the Department of Economics, College of Liberal Arts and Sciences, University of Connecticut using RePEc data on a server sponsored by the Society for Economic Dynamics.