title: A method for risk-adjusting employer contributions to competing health insurance plans.
abstract: Biased selection can threaten the viability of multiple choice health systems unless payments to particular plans are adjusted to offset risk differences among employees. We report the results of a study designed to predict medical care utilization and expenditures for groups of fee-for-service plan (FFS) and health maintenance organization (HMO) enrollees, using characteristics commonly available in the personnel files of large employers. Simulation analyses indicate that the six-equation, maximum likelihood model predicts well for groups of 1,000 or more. Additional data are required to reduce prediction errors for smaller groups. This new methodology potentially allows risk-rating of employer contributions to competing health plans, based on the expected utilization of the individuals choosing each plan.
authors.affiliation: School of Public Health, University of California, Berkeley 94720.
authors.forename: J C
authors.initials: JC
authors.lastname: Robinson
authors.forename: H S
authors.initials: HS
authors.lastname: Luft
authors.forename: L B
authors.initials: LB
authors.lastname: Gardner
authors.forename: E M
authors.initials: EM
authors.lastname: Morrison
mesh_terms: D004465:Economic Competition; D005251:Fees, Medical; D006264:Health Benefit Plans, Employee / Q000191:economics*; D005102:Health Expenditures; D006279:Health Maintenance Organizations / Q000706:statistics & numerical data; D007250:Inflation, Economic; D015273:Insurance Selection Bias; D007348:Insurance, Health; D015233:Models, Statistical; D012306:Risk; D014481:United States