A Model of the Impact of Reimbursement Schemes on Health Plan ChoiceJournal of Health Economics (1998)
AbstractFlat capitation (uniform prospective payments) makes enrolling healthy enrollees profitable to health plans. Plans with relatively generous benefits may attract the sick and fail through a premium spiral. We simulate a model of idealized managed competition to explore the effect on market performance of alternatives to flat capitation such as severity-adjusted capitation and reduced supply-side cost-sharing. In our model flat capitation causes severe market problems. Severity adjustment and to a lesser extent reduced supply-side cost-sharing improve market performance, but outcomes are efficient only in cases in which people bear the marginal costs of their choices.
- Risk adjustment,
- Adverse selection,
Publication DateJune, 1998
Citation InformationEmmett B. Keeler, Grace Carter and Joseph P. Newhouse. "A Model of the Impact of Reimbursement Schemes on Health Plan Choice" Journal of Health Economics Vol. 17 Iss. 3 (1998)
Available at: http://works.bepress.com/emmett_keeler/5/