Performance Pay in Insurance Markets: Evidence from Medicare

• 成果类型: Article
• 署名作者: Fioretti, Michele; Wang, Hongming
• 署名单位: Institut d'Etudes Politiques Paris (Sciences Po); Hitotsubashi University
• 刊物名称: REVIEW OF ECONOMICS AND STATISTICS
• ISSN/ISSBN: 0034-6535
• DOI: 10.1162/rest_a_01127
• 发表日期: 2023-09
• 页码: 1128-1144
• 关键词: risk adjustment; health-insurance; for-performance; part d; incentive contracts; adverse selection; benefit design; star ratings; care; QUALITY

摘要

Public procurement bodies increasingly resort to pay-for-performance contracts to promote efficient spending. We show that firm responses to pay-for-performance can widen the inequality in accessing social services. Focusing on the quality bonus payment initiative in Medicare Advantage, we find that higher quality-rated insurers responded to bonus payments by selecting healthier enrollees with premium differences across counties. Selection is profitable because the quality rating fails to adjust for differences in enrollee health. Selection inflated the bonus payments and shifted the supply of high-rated insurance to the healthiest counties, reducing access to lower-priced, higher-rated insurance in the riskiest counties.