The complementarity between risk adjustment and community rating
| Autor: | Jan Boone, Gijsbert Zwart, Michiel Bijlsma |
|---|---|
| Přispěvatelé: | Research programme EEF, Department of Economics, Research Group: Economics |
| Jazyk: | angličtina |
| Rok vydání: | 2017 |
| Předmět: |
Reinsurance
Economics and Econometrics Cherry picking media_common.quotation_subject Adverse selection Mechanism design COMPETITION Microeconomics Health insurance DESIGN Order (exchange) 0502 economics and business Community rating Economics 050207 economics WELFARE health care economics and organizations 050205 econometrics media_common Actuarial science Cherry-picking 05 social sciences Redistribution (cultural anthropology) CARE Risk adjustment Incentive ADVERSE SELECTION HEALTH-INSURANCE Welfare Finance |
| Zdroj: | Journal of Public Economics, 155, 21-37. Elsevier Science Journal of Public Economics, 155, 21-37. Elsevier |
| ISSN: | 0047-2727 |
| DOI: | 10.1016/j.jpubeco.2017.09.006 |
| Popis: | We analyze optimal risk adjustment in competitive health-insurance markets when insurers have better information on their customers' risk profiles than the sponsor of health insurance. In the optimal scheme, the sponsor uses reinsurance to screen insurers with bad and good risks, in order to lower premiums for enrollees with high expected healthcare costs. We then explore the effects of adding a community-rating requirement to complement this risk-adjustment scheme. With community rating, insurers have incentives to distort contract generosities to cherry-pick low-cost consumers. However, the reduced generosity for low-cost types makes screening through reinsurance easier, allowing the sponsor to redistribute more. When costs for reinsurance are low, or the sponsor's bias towards high-cost consumers is high, community rating dominates risk rating. (C) 2017 Elsevier B.V. All rights reserved. |
| Databáze: | OpenAIRE |
| Externí odkaz: |
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