title: A model of the impact of reimbursement schemes on health plan choice.
abstract: Flat capitation (uniform prospective payments) makes enrolling healthy enrollees profitable to health plans. Plans with relatively generous benefits may attract the sick and fail through a premium spiral. We simulate a model of idealized managed competition to explore the effect on market performance of alternatives to flat capitation such as severity-adjusted capitation and reduced supply-side cost-sharing. In our model flat capitation causes severe market problems. Severity adjustment and to a lesser extent reduced supply-side cost-sharing improve market performance, but outcomes are efficient only in cases in which people bear the marginal costs of their choices.
authors: Harvard University, Cambridge, MA 02138, USA. emmett_keeler@rand.org
authors: E B
authors: EB
authors: Keeler
authors: G
authors: G
authors: Carter
authors: J P
authors: JP
authors: Newhouse
mesh_terms: D002204:Capitation Fee / Q000706:statistics & numerical data*; D003258:Consumer Behavior / Q000191:economics / Q000706:statistics & numerical data*; D019981:Health Care Sector; D006301:Health Services Needs and Demand / Q000191:economics / Q000706:statistics & numerical data; D006801:Humans; D015273:Insurance Selection Bias; D018854:Managed Competition / Q000191:economics* / Q000706:statistics & numerical data; D017059:Models, Econometric; D011445:Prospective Payment System / Q000706:statistics & numerical data*; D012052:Reimbursement, Incentive; D012308:Risk Management / Q000191:economics / Q000706:statistics & numerical data