The complementarity between risk adjustment and community rating: Distorting market outcomes to facilitate redistribution

• 成果类型: Article
• 署名作者: Bijlsma, Michiel; Boone, Jan; Zwart, Gijsbert
• 署名单位: Tilburg University; Tilburg University; Tilburg University; Centre for Economic Policy Research - UK; University of Groningen; University of Groningen
• 刊物名称: JOURNAL OF PUBLIC ECONOMICS
• ISSN/ISSBN: 0047-2727
• DOI: 10.1016/j.jpubeco.2017.09.006
• 发表日期: 2017
• 页码: 21-37
• 关键词: Health insurance; Cherry-picking; risk adjustment; mechanism design

摘要

We analyze optimal risk adjustment in competitive health-insurance markets when insurers have better information on their customers' risk profiles than the sponsor of health insurance. In the optimal scheme, the sponsor uses reinsurance to screen insurers with bad and good risks, in order to lower premiums for enrollees with high expected healthcare costs. We then explore the effects of adding a community-rating requirement to complement this risk-adjustment scheme. With community rating, insurers have incentives to distort contract generosities to cherry-pick low-cost consumers. However, the reduced generosity for low-cost types makes screening through reinsurance easier, allowing the sponsor to redistribute more. When costs for reinsurance are low, or the sponsor's bias towards high-cost consumers is high, community rating dominates risk rating. (C) 2017 Elsevier B.V. All rights reserved.