Steps to reduce favorable risk selection in medicare advantage largely succeeded, boding well for health insurance exchanges.

Does Risk Adjustment Reduce Selection in the Private Health Insurance Market? New Evidence from the Medicare Advantage Program

Does Risk Adjustment Reduce Selection in the Private Health Insurance Market? New Evidence from the Medicare Advantage Program

Views expressed here are those of the authors and not of the institutions with which they are affiliated. Abstract Roughly 25 percent of Medicare beneficiaries are enrolled in a private Medicare Advantage plan, a fraction that has been growing steadily in recent years. Because these plans are " at risk " for the cost of their enrollees' care, they have an incentive to attract and retain differe...

The Consequences of a Public Health Insurance Option: Evidence From Medicare Part D Prescription Drug Markets

This paper examines a public option competing alongside private insurers in Medicare Part D. We estimate a random coefficient demand system and oligopoly supply-side model with endogenous premium subsidies and risk adjustment payments. If the public option does not affect health risk sorting, counterfactual results show modest competitive benefits. However, increased subsidy payments eliminate ...

The impact of the affordable care Act (ACA) on favorable risk selection and Beneficiaries’ health status in Medicare advantage: a preliminary assessment

BACKGROUND In response to increasing fiscal pressures, the Affordable Care Act (ACA) sought to reduce Medicare Advantage plan expenses by restructuring the bidding and payment processes. The purpose of this study is to assess the effects of the ACA's payment freeze and restructuring of the bidding and payment processes on favorable risk selection in Medicare Advantage plan enrollment (objective...

Risk Selection Threatens Quality Of Care For Certain Patients: Lessons From Europe's Health Insurance Exchanges.

Experience in European health insurance exchanges indicates that even with the best risk-adjustment formulas, insurers have substantial incentives to engage in risk selection. The potentially most worrisome form of risk selection is skimping on the quality of care for underpriced high-cost patients--that is, patients for whom insurers are compensated at a rate lower than the predicted health ca...