Risk adjustment deters selection and helps to assure fair and efficient payments among health insurers or capitated provider groups. However, since conventional risk adjustment allocates funds among insurers or regions according to current population health status, it does not reward — indeed,...

This paper attempts to improve our understanding of why many small private employers in the US choose not to offer health insurance to their employees. We develop a theory model, simulate its predictions, and assesses whether the model helps explain empirical patterns of firm decisions to offer...

In our theoretical model some firms do not offer health insurance to their employees because of large between-firm heterogeneity in expected employee health care costs. Because job turnover rates for healthier employees reduce by less than those for sicker employees when firms offer health...

This paper re-examines the relation between the predictability of health care spending and incentives due to adverse selection. Within an explicit model of health plan decisions about service levels, we show that predictability (how well spending on certain services can be anticipated),...

Between 1997 and 2000 the Australian government introduced three policy reforms that aimed to increase private health insurance coverage and reduce public hospital demand. The first provided income-based tax incentives; the second gave an across-the-board 30% premium subsidy; and the third...

The paper examines whether patterns of service level spending in capitated managed care plans differ from those in traditional non-managed care health plans. We apply the service selection model of Ellis and McGuire (2007) to recent, highly disaggregated commercial insurance data from Medstat...

Between 1997 and 2000 the Australian government introduced three policy reforms that aimed to increase private health insurance coverage and reduce public hospital demand. The first provided income-based tax incentives; the second gave an across-the-board 30% premium subsidy; and the third...

In their debate article, Andrew Street and Alan Maynard highlight the problems with using average cost pricing for hospital payments in the English National Health Service, pointing out that lack of cost containment and failure to improve quality are potential weaknesses. In this invited comment...

We develop and estimate a model of individual decisions to enrol in private health insurance in Australia in order to understand the effect of three specific government programs that changed the structure of premiums facing consumers. The three reforms encompass incomebased subsidies to...

Widespread integration of market-based incentives into healthcare systems calls for - and has elicited - increasing adoption of risk adjustment. By deterring selection, risk adjustment helps to assure fair and efficient payments among health insurers or capitated provider groups. However, since...