How Does Risk Selection Respond to Risk Adjustment? New Evidence from the Medicare Advantage Program

• 成果类型: Article
• 署名作者: Brown, Jason; Duggan, Mark; Kuziemko, Ilyana; Woolston, William
• 署名单位: United States Department of the Treasury; Stanford University; Princeton University; JP Morgan Chase & Company
• 刊物名称: AMERICAN ECONOMIC REVIEW
• ISSN/ISSBN: 0002-8282
• DOI: 10.1257/aer.104.10.3335
• 发表日期: 2014
• 页码: 3335-3364
• 关键词: Welfare; MARKETS; care

摘要

To combat adverse selection, governments increasingly base payments to health plans and providers on enrollees' scores from risk-adjustment formulae. In 2004, Medicare began to risk-adjust capitation payments to private Medicare Advantage (MA) plans to reduce selection-driven overpayments. But because the variance of medical costs increases with the predicted mean, incentivizing enrollment of individuals with higher scores can increase the scope for enrolling overpriced individuals with costs significantly below the formula's prediction. Indeed, after risk adjustment, MA plans enrolled individuals with higher scores but lower costs conditional on their score. We find no evidence that overpayments were on net reduced.