Does Risk Adjustment Reduce Selection in the Private Health Insurance Market? New Evidence from the Medicare Advantage Program
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چکیده
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 differentially healthy enrollees. To address this problem, starting in 2004, measures of enrollee health status and health care utilization were used to determine payments for MA plans. Using both individual and aggregate county-level data, we find no evidence that this risk adjustment reduced positive selection into MA plans. Our estimates suggest that Medicare recipients who join MA plans would have cost Medicare approximately $1,200 less per year if they had remained in FFS than the average FFS beneficiary. As on average MA plans are paid substantially more per enrollee than per capita FFS spending, we estimate that a Medicare beneficiary choosing an MA plan over traditional Medicare increases total Medicare costs by $2,500. Finally, we propose and provide evidence for a mechanism for our findings: MA plans offering care and cost sharing arrangements that differentially attract and retain healthy patients.
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Does Risk Adjustment Reduce Selection in the Private Health Insurance Market? New Evidence from the Medicare Advantage Program
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تاریخ انتشار 2010