Health Affairs · 1994 · 155 citations · 6 references
Health ReformFinancial ProtectionPolicy AnalysisRisk Adjustment TechnologyRisk ManagementManagementPublic HealthInsuranceHealth Services ResearchVulnerable Patient PopulationHealth Insurance ReformPublic PolicyHealth PolicyRisk Adjustment FormulaHealth InsuranceEconomic EvaluationRisk GovernanceHealth EconomicsPatient SafetyRisk AdjustmentHealth Care CostClinton Proposal
The Clinton proposal calls for a risk‑adjustment formula by April 1995, but current technology is primitive, creating a trade‑off between incentives for risk selection and cost control, with pure capitation maximizing both and fee‑for‑service minimizing them. I suggest experimentation with paying plans partly on the basis of risk‑adjusted capitation and partly on a fee schedule reflecting actual use (partial capitation). The authors propose a partial‑capitation payment system that blends risk‑adjusted capitation with fee‑for‑service based on actual utilization. The draft Clinton plan’s restriction on alliances offering plans above 120 % of the weighted average premium assumes risk‑adjustment capabilities that are currently unavailable, so the option should be relaxed or abandoned.
The Clinton proposal recognizes the need for successful risk adjustment and calls for the National Health Board to promulgate a risk adjustment formula by 1 April 1995. Unfortunately, risk adjustment technology is primitive; using observable characteristics such as age only slightly ameliorates the flawed incentives of not adjusting at all. Without major improvements in risk adjustment technology we face a trade-off between giving plans an incentive to select good risks and an incentive to produce at lowest cost. Pure capitation maximizes both incentives; pure fee-for-service minimizes both. I suggest experimentation with paying plans partly on the basis of risk-adjusted capitation and partly on the basis of a fee schedule reflecting actual use (partial capitation). In the draft Clinton plan, the option given to alliances not to offer plans priced above 120 percent of the weighted average premium appears to assume better risk adjustment ability than is now possible. This option should be relaxed or abandoned.
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Health Care Management Review · 1980 · 2.5K citations
The Concentration of Health Expenditures: An Update
Marc L. Berk, Alan C. Monheit · Health Affairs · 1992 · 112 citations