Why don't private employers use risk adjustment? Conference overview.
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Biomedical subjects
Publications and source records attributed to J Glazer.
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This paper lays down a set of hypotheses to explain why private employers do not use formal risk adjustment. The theme running through these hypotheses is simple: private employers don't need formal adjustment because they have better tools for dealing with adverse selection than formal risk adjustment provides. Open enrollment provisions, premium negotiations, and restricting employees' choices of health plans are mechanisms superior to formal risk adjustment for dealing with problems caused by adverse selection.
Health plans paid by capitation have an incentive to distort the quality of services they offer to attract profitable and to deter unprofitable enrollees. We characterize plans' rationing as a "shadow price" on access to various areas of care and show how the profit maximizing shadow price depends on the dispersion in health costs, individuals' forecasts of their health costs, the correlation between use in different illness categories, and the risk adjustment system used for payment. These factors are combined in an empirically implementable index that can be used to identify the services that will be most distorted by selection incentives.
In the search for greater efficiency and cost-containment, many health systems have introduced the practice of medical care providers operating under a fixed budget, often referred to as the capitation or fundholding contract. Although the capitation contract seems equitable at first glance, the sequential decision-making practice of providers-shaped by their rate of present-preference and their attitude toward the risk of running out of budget-may result in serious violations of basic equity principles. We propose a variable soft (or mixed) payment contract (VSC), where the share of the retrospective payment increases over time, as a way to make the contracts more equitable. We also discuss how the parameters of the capitation contract (length of the budget period, soft or hard contracts, solo vs. consortium practice etc.), which are usually set by efficiency criteria, may have serious implications with regard to the equity of the system.
This paper studies the efficiency effects of physician fees when the insurer (possibly the government) pays a fee for each procedure, and the doctor may supplement the fee by an extra charge to the patient, a practice known as 'balance billing.' Monopolistically competitive physicians can discriminate among patients on the basis of both price and quality. Equilibria with and without balance billing are compared. The paper analyzes and recommends a new fee policy, a form of payer 'fee discrimination.'
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Hydrocele formation in the incompletely obliterated processus vaginalis (canal of Nuck) is an uncommon and infrequently reported finding in women. Approximately one-third of cases are associated with inguinal herniae. Surgical exploration permits excision of the hydrocele and repair of any coexisting fascial defect.
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