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Risk adjustment with an outside option

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  • Newhouse, Joseph P.

Abstract

Much of the risk adjustment literature has focused on how persons should be classified and given weights. It has given less attention to the amount of funds in the risk adjustment pool. If, however, there is an outside option, as there is in the principal American risk adjustment systems, there can be favorable or adverse selection in the risk pool. To address any such selection requires that the risk adjustment system not be zero sum; the main American risk adjustment systems differ in this respect.

Suggested Citation

  • Newhouse, Joseph P., 2017. "Risk adjustment with an outside option," Journal of Health Economics, Elsevier, vol. 56(C), pages 256-258.
    • Handle: RePEc:eee:jhecon:v:56:y:2017:i:c:p:256-258
    DOI: 10.1016/j.jhealeco.2017.01.001
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    Cited by:

    1. Joseph P. Newhouse & Mary Beth Landrum & Mary Price & J. Michael McWilliams & John Hsu & Thomas G. McGuire, 2019. "The Comparative Advantage of Medicare Advantage," American Journal of Health Economics, University of Chicago Press, vol. 5(2), pages 281-301, Spring.
    2. Timothy Layton & Ellen J. Montz & Mark Shepard, 2017. "Health Plan Payment in U.S. Marketplaces: Regulated Competition with a Weak Mandate," NBER Working Papers 23444, National Bureau of Economic Research, Inc.

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