Optimal cost reimbursement of health insurers to reduce risk selection.

Abstract:

:In the absence of a perfect risk adjustment scheme, reimbursing health insurers' costs can reduce risk selection in community-rated health insurance markets. In this paper, we develop a model in which insurers determine the cost efficiency of health care and have incentives for risk selection. We derive the optimal cost reimbursement function, which balances the incentives for cost efficiency and risk selection. For health cost data from a Swiss health insurer, we find that an optimal cost reimbursement scheme should reimburse costs only up to a threshold.

journal_name

Health Econ

journal_title

Health economics

authors

Kifmann M,Lorenz N

doi

10.1002/hec.1614

subject

Has Abstract

pub_date

2011-05-01 00:00:00

pages

532-52

issue

5

eissn

1057-9230

issn

1099-1050

journal_volume

20

pub_type

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