A piece of my mind: stigma.
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Health Services Accessibility↗
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Results for “Insurance Selection Bias”
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HMO selection and Medicare costs: Bayesian MCMC estimation of a robust panel data tobit model with survival.
The fraction of US Medicare recipients enrolled in health maintenance organizations (HMOs) has increased substantially over the past 10 years. However, the impact of HMOs on health care costs is still hotly debated. In particular, it is argued that HMOs achieve cost reduction through 'cream-skimming' and enrolling relatively healthy patients. This paper develops a Bayesian panel data tobit model of HMO selection and Medicare expenditures for recent US retirees that accounts for mortality over the course of the panel. The model is estimated using Markov Chain Monte Carlo (MCMC) simulation methods, and is novel in that a multivariate t-link is used in place of normality to allow for the heavy-tailed distributions often found in health care expenditure data. The findings indicate that HMOs select individuals who are less likely to have positive health care expenditures prior to enrollment. However, there is no evidence that HMOs disenrol high cost patients. The results also indicate the importance of accounting for survival over the panel, since high mortality probabilities are associated with higher health care expenditures in the last year of life.
Aged↗
A note on risk adjustment and fair compensation.
This note comments on the application of results from the theory of fair compensation to risk adjustment. It argues that the main flaw of such application lies in the consideration of health plans merely as administrative social agents, through which money flows from a central fund to providers of medical care, ignoring their economic behaviour. However, it is that behaviour which raises the issue of risk selection to begin with. With linear health expenditure function, the fair compensation axiomatic solution is shown to be equivalent to the solution of a simple optimal regulation problem. That equivalence permits the analysis of several further issues related to risk adjustment and to the application of the theory of fair compensation to it.
Cost Control↗
Reimbursing insurance carriers: the case of 'MUFACE' in the Spanish health care system.
This article aims at contributing to the analysis of financial incentives in managed competition, on the basis of the literature on procurement and regulation under incomplete information. More specifically, we focus on MUFACE, the publicly funded health care system for Spanish civil servants and dependants. MUFACE makes up an internal market, where competing public and private insurers are reimbursed a flat capitation payment. Some of our results are that theoretically, both pre-contractual (adverse) selection of insurers contracted by MUFACE, and post-contractual risk selection of enrollees undertaken by insurers, should occur under flat capitation.
Capitation Fee↗
Health care reform: motivation for discrimination?
One of the major issues in the health care reform debate is the requirement that employers pay a portion of their employees' health insurance premiums. This paper examines the method for calculating the employer share of the health care premiums, as specified in the President's health care reform proposal. The calculation of the firm's cost of providing employee health care benefits is a function of marital status as well as the incidence of two-income earner households. This paper demonstrates that this method provides for lower than average premiums for married employees with no dependents in communities in which there is at least one married couple where both individuals participate in the labor market. This raises the non-wage labor costs of employing single individuals relative to individuals which are identical in every respect except their marital status. This paper explores the economic implications for hiring, as well as profits, for firms located in a perfectly-competitive industry. The results of the theoretical model presented here are clear. Under this proposed version of health care reform, ceteris paribus, firms have a clear preference for two-earner households. This paper also demonstrates that the incentive to discriminate is related to the size of the firm and to the size of the average wage of full-time employees for firms which employ fewer than fifty individuals. While this paper examines the specifics of President Clinton's original proposal, the conclusions reached here would apply to any form of employer-mandated coverage in which the premiums are a function of family status and the incidence of two-earner households.
Economic Competition↗
How profitable is risk selection? A comparison of four risk adjustment models.
To mitigate selection triggered by capitation payments, risk-adjustment models bring capitation payments closer on average to individuals' expected expenditure. We examine the maximum potential profit that plans could hypothetically gain by using their own private information to select low-cost enrollees when payments are made using four commonly used risk adjustment models. Simulations using a privately insured sample suggest that risk selection profits remain substantial. The magnitude of potential profit varies according to the risk adjustment model and the private information plans can employ to identify profitable enrollees.
Actuarial Analysis↗
Risk selection and matching in performance-based contracting.
This paper examines selection and matching incentives of performance-based contracting (PBC) in a model of patient heterogeneity, provider horizontal differentiation and asymmetric information. Treatment effectiveness is affected by the match between a patient's illness severity and a provider's treatment intensity. Before PBC, a provider's revenue is unrelated to treatment effectiveness; therefore, providers supply treatments even if their treatment intensities do not match with the patients' severities. Under PBC, budget allocation is positively related to treatment performance; patient-provider mismatch is reduced because patients are referred more often. Using data from the state of Maine, we show that PBC leads to more referrals and better match between illness severity and treatment intensity. Moreover, we find that PBC has a positive but insignificant effect on dumping.
Adolescent↗
Are Colombian sickness funds cream skimming enrollees? An analysis with suggestions for policy improvement.
One of the primary objectives of Colombian social health insurance reform was to increase competition among for-profit insurers. Unfortunately, the flat capitated formula creates an opportunity for sickness funds to maximize reimbursement gains by cream skimming--selecting against unhealthy individuals. This paper explores sickness fund selection behavior to evaluate the efficiency losses associated with the introduction of managed competition in Colombia. Data from a 1997 Colombian household survey are analyzed with a bivariate probit model with partial observability using instrumental variables. The model yields some evidence of sickness fund selection based on health status. Public policy options to discourage risk selection by health status are discussed.
Colombia↗
Do adjusted clinical groups eliminate incentives for HMOs to avoid substance abusers? Evidence from the Maryland Medicaid HealthChoice program.
The adequacy of risk adjustment to eliminate incentives for managed care organizations (MCOs) to avoid enrolling costly patients had been questioned. This study explored systematic differences in expenditures between beneficiaries with and without substance disorders assigned to the same capitation rate group under the Maryland Medicaid HealthChoice program. The investigators used fiscal year (FY) 1995 to 1997 Medicaid data to assign beneficiaries to rate cells based on FY 1995 diagnoses and compared the distribution of expenditures for beneficiaries with and without substance disorders, defined using FY 1997 and FY 1995 diagnoses. Results showed that differences in FY 1997 expenditures between beneficiaries with and without FY 1995 substance disorders were negligible. However, MCOs could expect greater average losses and lower average profits on beneficiaries with FY 1997 substance disorders. Thus, the adjusted clinical groups methodology used to adjust capitation payments in the HealthChoice program attenuated, but did not eliminate, financial incentives for MCOs to avoid substance abusers.
Adolescent↗
Evaluating selection out of health plans for Medicaid beneficiaries with substance abuse.
In the absence of adequate risk adjustment, capitation for enrollees creates incentives for health plans to enroll and retain good risks and to avoid bad risks. This article examines whether Maryland Medicaid beneficiaries with histories of substance abuse disenroll from health plans more frequently than those without such histories. The findings indicate that enrollees with a history of substance abuse were more likely to switch plans than other enrollees, regardless of whether they chose the health plan or were randomly assigned to the plan. These results suggest that current risk-adjustment systems may fail to offset selection incentives in modern capitated health plans.
Adult↗
Medicaid chemical dependency patients in a commercial health plan: do high medical costs come down over time?
A cohort of 197 Medicaid-insured patients presenting for treatment in Kaiser Permanente's outpatient chemical dependency treatment program were observed the year prior to their program intake visit and followed for 3 years afterwards, to compare their medical costs and utilization to demographically matched commercially insured patients entering the same programs. The Medicaid-insured patients on average incurred medical costs 60% higher than non-Medicaid patients during the 12-month preintake period ($5402 vs $3377). [corrected] During the 3 years subsequently, however, both groups of chemical dependency patients displayed significant declines in medical costs, averaging 30% from the baseline period to the third year of follow-up. Cost trends reflected declines in use of hospital days, emergency department visits, and nonemergent outpatient visits. These results may help address concerns among Medicaid managed care providers and payers by giving a more realistic account of the long-term costs of this group of high-utilizing enrollees.
Adolescent↗
Exploring the concept of genetic discrimination.
The issue of genetic discrimination has attracted growing attention and has been the focus of a recent major Australian inquiry. It is, however, a complex and loaded notion, open to interpretation. This paper explores the concept of genetic discrimination in both its theoretical and practical dimensions. It examines its conceptual underpinnings, how it is understood, and how this understanding fits within the legal framework of disability discrimination. The paper also examines the phenomenon in practice, including the 'fear factor' and the resulting implications for the development of regulatory policy. The paper argues that we need to be discerning in our interpretation of this term, and differentiate between discriminatory conduct which is legal and illegal. Further, it is argued that a concerted societal response to the 'problem' of genetic discrimination is needed involving targeted legal reforms as well as broader non-legal strategies.
Advisory Committees↗
Price vs. quantity in health insurance reimbursement.
While "integrated" systems regulate the quantity of health services, "Bismarckian" systems regulate their price. This paper compares the consumers' allocations implemented within the two reimbursement systems. In the model, illness has a negative impact on labor productivity while public insurance is financed through income tax. Consumers have private information with respect to a parameter which can be interpreted as heterogeneity either in intensity of their preferences for treatment or in the type of illness. The social planner may be constrained to adopt uniform insurance plans, or may be free to choose self selecting plans. The analysis of uniform plans shows that Bismarckian systems dominate integrated systems from the social welfare point of view; whereas the opposite ranking holds with self-selecting plans.
Consumer Behavior↗
Diagnosing asthma in young children.
Asthma is a respiratory syndrome that frequently is underdiagnosed, particularly in young children. This primarily results from the lack of clinically useful criteria for making the diagnosis in the absence of objective tests, which are problematic in young children. Because new information suggests that delayed diagnosis may lead to permanently decreased lung function that could be prevented by early treatment, it is important that an accurate diagnosis be made as early as possible. Although simple criteria exist for determining if a patient has asthma, there is a tendency to delay making the diagnosis for a variety of reasons, including the observation that many children who begin wheezing at an early age stop wheezing by the time they are 6 years of age, and concerns over adverse effects from falsely labeling a patient with a potentially stigmatizing condition. Young children who receive an incorrect diagnosis of asthma are at an increased risk of receiving unnecessary medications and may be denied life insurance, health insurance, and admission into the military later in life. On close examination, each of these concerns is unfounded. Early diagnosis of asthma has many potentially positive effects; the negative effects have generally been exaggerated and do not stand up to close scrutiny. Routine use of clinically useful criteria for making the diagnosis, as outlined in this review, may help to simplify the process of making an early diagnosis of asthma.
Airway Obstruction↗
The Human Genome Project under the microscope.
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Base Sequence↗
Insurance and genetic testing.
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Genetic Diseases, Inborn↗
Note. Evaluating exclusionary interventions.
In evaluation research, some interventions are designed to affect both the subjects that receive the intervention and those that do not. Preferred provider organizations (PPOs) are an example, because if they are successful, PPOs will direct patients away from non-preferred providers towards preferred providers. When the intervention affects all subjects, the excluded group cannot serve as a control group if one wishes to estimate the experience of subjects in the absence of the intervention. That estimate must come from subjects completely unaffected by the treatment.
Contract Services↗
Must adverse selection cause premium spirals?
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Community Participation↗