Capping Risk Adjustment?
When premiums are community-rated, risk adjustment (RA) serves to mitigate competitive insurersï¿½ incentive to select favorable risks. However, unless fully prospective, it also undermines their incentives for efficiency. By capping its volume, one may try to counteract this tendency, exposing insurers to some financial risk. This in term runs counter the quest to refine the RA formula, which would increase RA volume. Specifically, the adjuster, ï¿½Hospitalization or living in a nursing home during the previous yearï¿½ will be added in Switzerland starting 2012. This paper investigates how to minimize the opportunity cost of capping RA in terms of increased incentives for risk selection.
|Date of creation:||Sep 2009|
|Publication status:||published in Journal of Health Economics, 29(4), pp. 499-507, 2010|
|Contact details of provider:|| Postal: Schönberggasse 1, CH-8001 Zürich|
Phone: +41-1-634 21 37
Fax: +41-1-634 49 82
Web page: http://www.econ.uzh.ch/
More information through EDIRC
When requesting a correction, please mention this item's handle: RePEc:soz:wpaper:0915. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Marita Kieser)
If references are entirely missing, you can add them using this form.