A model of the impact of reimbursement schemes on health plan choice.

Abstract:

:Flat capitation (uniform prospective payments) makes enrolling healthy enrollees profitable to health plans. Plans with relatively generous benefits may attract the sick and fail through a premium spiral. We simulate a model of idealized managed competition to explore the effect on market performance of alternatives to flat capitation such as severity-adjusted capitation and reduced supply-side cost-sharing. In our model flat capitation causes severe market problems. Severity adjustment and to a lesser extent reduced supply-side cost-sharing improve market performance, but outcomes are efficient only in cases in which people bear the marginal costs of their choices.

journal_name

J Health Econ

authors

Keeler EB,Carter G,Newhouse JP

doi

10.1016/s0167-6296(97)00029-5

subject

Has Abstract

pub_date

1998-06-01 00:00:00

pages

297-320

issue

3

eissn

0167-6296

issn

1879-1646

pii

S0167-6296(97)00029-5

journal_volume

17

pub_type

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