Competition leverage: how the demand side affects optimal risk adjustment

• 成果类型: Article
• 署名作者: Bijlsma, Michiel; Boone, Jan; Zwart, Gijsbert
• 署名单位: Tilburg University; Tilburg University
• 刊物名称: RAND JOURNAL OF ECONOMICS
• ISSN/ISSBN: 0741-6261
• DOI: 10.1111/1756-2171.12071
• 发表日期: 2014
• 页码: 792-815
• 关键词: health-insurance; adverse selection; trade-off; price; MARKETS; equilibrium; capitation; EFFICIENCY; QUALITY; CHOICE

摘要

We study optimal risk adjustment in imperfectly competitive health insurance markets when high-risk consumers are less likely to switch insurer than low-risk consumers. Insurers then have an incentive to select even if risk adjustment perfectly corrects for cost differences. To achieve first best, risk adjustment should overcompensate insurers for serving high-risk agents. Second, we identify a trade-off between efficiency and consumer welfare. Reducing the difference in risk adjustment subsidies increases consumer welfare by leveraging competition from the elastic low-risk market to the less elastic high-risk market. Third, mandatory pooling can increase consumer surplus further, at the cost of efficiency.