title: Integrating risk adjustment and enrollee premiums in health plan payment.
abstract: In two important health policy contexts - private plans in Medicare and the new state-run "Exchanges" created as part of the Affordable Care Act (ACA) - plan payments come from two sources: risk-adjusted payments from a Regulator and premiums charged to individual enrollees. This paper derives principles for integrating risk-adjusted payments and premium policy in individual health insurance markets based on fitting total plan payments to health plan costs per person as closely as possible. A least squares regression including both health status and variables used in premiums reveals the weights a Regulator should put on risk adjusters when markets determine premiums. We apply the methods to an Exchange-eligible population drawn from the Medical Expenditure Panel Survey (MEPS).
authors.affiliation: Department of Health Care Policy, Harvard Medical School, United States; NBER, United States. Electronic address: mcguire@hcp.med.harvard.edu.
authors.forename: Thomas G
authors.initials: TG
authors.lastname: McGuire
authors.forename: Jacob
authors.initials: J
authors.lastname: Glazer
authors.forename: Joseph P
authors.initials: JP
authors.lastname: Newhouse
authors.forename: Sharon-Lise
authors.initials: SL
authors.lastname: Normand
authors.forename: Julie
authors.initials: J
authors.lastname: Shi
authors.forename: Anna D
authors.initials: AD
authors.lastname: Sinaiko
authors.forename: Samuel H
authors.initials: SH
authors.lastname: Zuvekas
mesh_terms: D000293:Adolescent; D000328:Adult; D000465:Algorithms; D036262:Empirical Research; D005260:Female; D005102:Health Expenditures; D062265:Health Insurance Exchanges; D006801:Humans; D007348:Insurance, Health / Q000191:economics*; D008297:Male; D006278:Medicare / Q000458:organization & administration*; D008875:Middle Aged; D058991:Patient Protection and Affordable Care Act; D017149:Private Sector; D012044:Regression Analysis; D020379:Risk Adjustment / Q000379:methods / Q000706:statistics & numerical data; D014481:United States; D055815:Young Adult
keywords: Exchanges; Health insurance; I13; I18; Medicare; Premiums; Risk adjustment