The Prevalence of Formal Risk Adjustment in Health Plan Purchasing
Open Access
- 1 August 2001
- journal article
- research article
- Published by SAGE Publications in INQUIRY: The Journal of Health Care Organization, Provision, and Financing
- Vol. 38 (3), 245-259
- https://doi.org/10.5034/inquiryjrnl_38.3.245
Abstract
This paper describes the prevalence of formal risk adjustment of payments made to health plans by Medicare, Medicaid, state governments, and private payers. In this paper, “formal risk adjustment” is defined as the adjustment of premiums paid to health plans based on individual-level diagnostic or demographic information. We find that formal risk adjustment is used for about one-fifth of all enrollees in capitated health plans. While the Medicare and Medicaid programs rely on formal risk adjustment for virtually all their health plan enrollees, the practice is used for only about 1% of privately insured health plan enrollees. Our findings raise the question of why regulators have adopted formal risk adjustment, but private purchasers for the most part have not.Keywords
This publication has 22 references indexed in Scilit:
- Private Employers Don't Need Formal Risk AdjustmentINQUIRY: The Journal of Health Care Organization, Provision, and Financing, 2001
- Designing Employer Health Benefits for a Heterogeneous Workforce: Risk Adjustment and its AlternativesINQUIRY: The Journal of Health Care Organization, Provision, and Financing, 2001
- A Demand-Side View of Risk AdjustmentINQUIRY: The Journal of Health Care Organization, Provision, and Financing, 2001
- Health Plans and Selection: Formal Risk Adjustment vs. Market Design and ContractsINQUIRY: The Journal of Health Care Organization, Provision, and Financing, 2001
- Formal Risk Adjustment by Private EmployersINQUIRY: The Journal of Health Care Organization, Provision, and Financing, 2001
- Early experience with a new model of employer group purchasing in Minnesota.Health Affairs, 1999
- The pursuit of quality by business coalitions: a national survey.Health Affairs, 1999
- Does A Fixed-Dollar Premium Contribution Lower Spending?Health Affairs, 1998
- Paying for Health Insurance: The Trade-Off between Competition and Adverse SelectionThe Quarterly Journal of Economics, 1998
- How Large Employers Are Shaping the Health Care MarketplaceNew England Journal of Medicine, 1998