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At least 19 recordsLinked to original sources
PubMed1991

A method for risk-adjusting employer contributions to competing health insurance plans.

Biased selection can threaten the viability of multiple choice health systems unless payments to particular plans are adjusted to offset risk differences among employees. We report the results of a study designed to predict medical care utilization and expenditures for groups of fee-for-service plan (FFS) and health maintenance organization (HMO) enrollees, using characteristics commonly available in the personnel files of large employers. Simulation analyses indicate that the six-equation, maximum likelihood model predicts well for groups of 1,000 or more. Additional data are required to reduce prediction errors for smaller groups. This new methodology potentially allows risk-rating of employer contributions to competing health plans, based on the expected utilization of the individuals choosing each plan.

Economic Competition↗
PubMed1990

Insurability and the HIV epidemic: ethical issues in underwriting.

The HIV epidemic has focused criticism on standard underwriting practices that exclude people with AIDS or at high risk for it from insurance coverage. Insurers have denied the charge that these practices are unfair, claiming instead that whatever is actuarially fair is fair or just. This defense will not work unless we assume that individuals are entitled to gain advantages and deserve losses merely as a result of their health status. That assumption is highly controversial at the level of theory and is inconsistent with many of our moral beliefs and practices, including our insurance practices. We should reject the insurers' argument. Justice in health care requires that we protect equality of opportunity, and that implies sharing the burden of protecting people against health risks. In a just healthcare system, whether mixed or purely public, the insurance scheme is in systematic terms actuarially unfair, for its overall social function must be to guarantee access to appropriate care. This does not mean that in our system insurers are ignoring their obligation to provide access to coverage. The obligation to assure access is primarily a social one, and the failures of access in our system are the result of public failures to meet those obligations. In a just but mixed system, there would be an explicit division of responsibility among public and private insurance schemes. In our mixed but unjust system, both legislators and insurers cynically pretend that the uninsured are the responsibility of the other. The attempt to treat actuarial fairness as a moral notion thus disguises what is really at issue, namely, the risk to insurers of adverse selection and the economic advantages of standard underwriting practices. Standard underwriting practices will be fair only if they are part of a just system, not if they simply are actuarially fair. The failure of the argument from actuarial fairness means that we must face an issue private insurers had hoped to avoid if we are to defend standard underwriting practices at all. In view of the clear risk that a mixed system will fail to assure access to care, the burden falls on defenders of a mixed system. They must show us that its social benefits outweigh its social costs, and that it is possible to have a mixed system that is not only just, but also is superior to a compulsory, universal insurance scheme.

Acquired Immunodeficiency Syndrome↗
PubMed1989

The role of health practices in HMO selection bias: a confirmatory study.

This research examines the relation between employees' health practices and health plan selection. A previous study, limited to one firm, showed that employees choosing a health maintenance organization (HMO) and a fee-for-service (FFS) plan had similar health practices. We extend this inquiry to 17 Minneapolis employees, all of whom offer at least one FFS plan and one or more of the 6 Twin Cities HMOs. Health practices were measured by cigarette smoking, heavy drinking (or abstinence from drinking), use of seat belts, and exercise. We estimated health plan choice equations that show that employees with poor health practices do not systematically prefer FFS plans compared with independent practice associations (IPAs). Nor do they select FFS or IPA plans compared with HMOs on the basis of health habits. We suggest that HMOs do not gain long-term cost advantages by enrolling employees with favorable health practices.

Choice Behavior↗
PubMed1992

Towards a capitation formula for competing health insurers. An empirical analysis.

In many countries the concept of capitating health care insurers is receiving increasing attention. The main reason is, that capitation may induce health care insurers in a competitive environment to concentrate more on cost containment. However, if the adjusters on which capitation payments are based, are too global, there may be ample room for risk selection by the insurers whilst also an unfair distribution of funds over the insurers may result, thereby undermining the objectives of capitation. The prime motivation for the present study is, that the Dutch government, as part of proposals for a new, market oriented structure of health care system, is considering to capitate insurers on the basis of global parameters like age, gender and location. Our analysis based on panel data of some 35,000 individuals, shows that the proportion of variance in annual health care expenditures that can be predicted (R2) by such a global capitation formula, is only 0.024. This is less than 1/5 of our estimate of the theoretically maximum achievable R2 which amounts to 0.138, implying the existence of abundant selection opportunities, e.g. on the basis of past expenditures or other health indicators. Alternative capitation formulae incorporating prior-year's costs and reaching about 3/5 of the maximum obtainable R2, effectively remove the profitableness of selection on the basis of past expenditures. The findings suggest, however, that selection via (chronic) health status may still be profitable to some extent. Therefore, we also analyzed data from the Dutch Health Interview Survey (N approximately 20,000) which comprised better health indicators. It appeared that a capitation formula based on the global adjusters mentioned above as well as three health status indicators and several background characteristics, yields an R2 of about 0.114, which probably accounts for 3/4 of our estimate of the maximum obtainable R2. The main conclusion is, that in the short term information on prior expenditures, which is available in the files of most insurers and thus may be used for risk selection, should be included in the capitation formula. For the more distant future, the formula should be expanded with indicators of chronic health status, possibly based on diagnostic information from previous, non-discretionary hospitalizations.

Age Factors↗
PubMed1989

Adjusting employer group capitation premiums by Community Rating by class factors.

Community rating of employer group health maintenance organization (HMO) capitation premiums results in low premiums for some groups and high premiums for other groups, as compared with the marginal costs of providing services. In effect, low health risk groups are cross subsidizing high health-risk groups in an HMO. This has caused several inefficiencies in the health plan marketplace, which have directly benefited higher-risk groups. For this reason, certain low-risk groups are searching for new strategies to improve market efficiency. One strategy is Community Rating by Class (CRC), a system which adjusts community rated capitation premiums by broad-based risk factors. This article examines CRC as a strategy to help reduce the inefficiencies caused by current federal regulations. In regressions predicting future year total family health expenditures, the CRC Model achieved an R2 value of 0.211. This value was over half the R2 value of an experience rated approach, based on prior year utilization and expenditure variables. Family size accounted for 80% of the variance explained by the CRC Model. The results indicate that the CRC rating approach may be a good mechanism to correct for cross subsidization of employer group capitation premiums.

Adolescent↗
PubMed1992

The inequality of medical expenditures for several years in a healthy, nonelderly population.

Previous studies have shown that the distribution of annual medical expenditures for a population is very unequal and remains so for periods of more than 1 year. The authors use a better measure of inequality, the Gini coefficient, to test its persistence for longer periods. This measure is applied to data collected from the Rand Health Insurance Experiment. The experiment enrolled a nonelderly population typical of those covered by employer health plans for periods up to 5 years. The distributions of annual expenditures for this population are highly unequal, in line with previous studies. Inequality declines substantially when longer periods are considered.

Adolescent↗
PubMedDate not supplied

Genetics and the moral mission of health insurance.

Deciding whether genetic differences among individuals are morally relevant to health insurance requires us to ask, What kind of good is health care? and, What principles should govern its distribution? There are good reasons to doubt that "actuarial fairness" is an adequate description of genuine fairness in health insurance.

Actuarial Analysis↗
PubMedDate not supplied

Insurance for the insurers. The use of genetic tests.

Genetic testing raises concerns that individuals will be denied health insurance (and thus, effectively, access to health care), or that employers will screen to eliminate potentially costly workers. Although we as a society do not yet concur on the degree to which private businesses have a responsibility to promote social justice, several different policy alternatives might allow us to weigh the interests of insurers, as businesses, against the interests of citizens in a responsible manner.

Eligibility Determination↗
PubMed1992

The practice and ethics of risk-rated health insurance.

Health insurance in the United States is driven by competitive risk rating and is promoted as the best way to give policyholders optimal value for their money and to be fair to those with lower risks. In practice, however, competitive risk rating costs more than noncompetitive, universal systems of health insurance, and it erodes the basic function of insurance to spread infrequent large losses over a wide base. This article describes not only how risk rating covers least those with the greatest medical bills, but also how it has spawned a labyrinth of complex manipulations by insurance companies to charge more or pay less than actuarially fair risk rating would justify. The final section shows that even if risk rating were done fairly, it contradicts moral fairness. Many of the leading proposals for national health insurance do not address these practical and ethical issues. The medical profession and policymakers need to discuss them and take a stand on them.

Actuarial Analysis↗
PubMed1991

Loss of private health insurance among homosexual men with AIDS.

In this study we analyze information on self-reported health insurance coverage, HIV screening by insurers, and loss of health insurance. We distributed questionnaires to gay male participants in the Baltimore and Los Angeles sites of the Multicenter AIDS Cohort Study and to leukemia patients and gay AIDS patients seen at the Johns Hopkins Hospital. In this unusually well-educated and well-insured group, 90% of participants without AIDS had private health insurance coverage, compared with only 64% of participants with AIDS. Persons with AIDS (PWAs) were 33 times as likely to have Medicaid as persons without AIDS, and PWAs were 5 times as likely to have lost health coverage altogether as persons without AIDS.

AIDS Serodiagnosis↗
PubMed1991

Private health insurance and medical care utilization: evidence from the Medicare population.

This paper examines the impact of supplemental health insurance policy ownership on the use of health care services by the elderly. It employs a data base consisting of Medicare claims data from over 2,000 beneficiaries in six states, actual copies of their supplemental insurance policies, and detailed survey information. The results show that policy ownership has a substantial, positive impact on service usage and costs, particularly for beneficiaries in fair or poor health. The greatest impact was found for policies that provide first-dollar coverage.

Aged↗
PubMed1990

Multiple choice health insurance: the lessons and challenge to private insurers.

A health policy consultant with 20 years of experience in public and private health insurance, and particularly multiple choice systems, suggests the evidence is in on our national effort to contain costs through competition, HMOs, and multiple choice health plans. Specifically, we have learned that 1) multiple choice plans are not containing costs for employers, 2) while group and staff model HMOs contain costs, few have cut employers' costs in multiple choice health plans, and 3) group and staff model HMOs' capacity to contain costs has not been matched by insurers' managed care plans. Three options for insurers and HMOs to offer employers are outlined. The options are aimed at changing the behavior of providers so they offer lower cost health care.

Community Participation↗
PubMed1989

Restructuring the Federal Employees Health Benefits Program: the private sector option.

The Federal Employees Health Benefits Program (FEHBP) needs to contain its costs. This paper recommends reforms of FEHBP that would substantially lower costs. As a first step, FEHBP should offer each employee a high and low option from a single conventional carrier, plus several HMO alternatives. FEHBP's practice of offering employees a choice of conventional carriers is virtually unheard of in the private sector. Cost control is more likely when carriers compete for employment groups rather than for individual employees. In addition, my analysis suggests that FEHBP should self-insure, competitively select third-party administrators (TPAs), one for each region of the country, aggressively manage program costs through preadmission certification and DRGs, and allow Medicare-eligible annuitants to enroll in Medicare HMOs and receive the government contribution. All of these reforms have been successfully implemented elsewhere, either by private employers or state or federal governments. These reforms would yield savings of at least $500 million annually for taxpayers and additional savings for federal employees.

Cost Control↗