title: Private employers don't need formal risk adjustment.
abstract: This paper lays down a set of hypotheses to explain why private employers do not use formal risk adjustment. The theme running through these hypotheses is simple: private employers don't need formal adjustment because they have better tools for dealing with adverse selection than formal risk adjustment provides. Open enrollment provisions, premium negotiations, and restricting employees' choices of health plans are mechanisms superior to formal risk adjustment for dealing with problems caused by adverse selection.
authors.affiliation: Faculty of Management, Tel Aviv University.
authors.forename: J
authors.initials: J
authors.lastname: Glazer
authors.forename: T G
authors.initials: TG
authors.lastname: McGuire
mesh_terms: D003256:Community Participation / Q000191:economics; D017049:Employer Health Costs; D005249:Fees and Charges; D006264:Health Benefit Plans, Employee / Q000191:economics* / Q000706:statistics & numerical data; D006297:Health Services Accessibility; D006801:Humans; D015273:Insurance Selection Bias; D018854:Managed Competition / Q000191:economics*; D017149:Private Sector / Q000191:economics* / Q000706:statistics & numerical data; D011785:Quality Assurance, Health Care; D020379:Risk Adjustment / Q000706:statistics & numerical data*; D014481:United States