Steps To Reduce Favorable Risk Selection In Medicare Advantage Largely Succeeded, Boding Well For Health Insurance Exchanges

Within Medicare, the Medicare Advantage program has historically attracted better risks-healthier, lower-cost patients-than has traditional Medicare. The disproportionate enrollment of lower-cost patients and avoidance of higher-cost ones during the 1990s-known as favorable selection-resulted in Med...

Full description

Saved in:
Bibliographic Details
Published in:Health Affairs 2012-12, Vol.31 (12), p.2618-2628
Main Authors: Newhouse, Joseph P., Price, Mary, Huang, Jie, McWilliams, J. Michael, Hsu, John
Format: Article
Language:English
Subjects:
Beneficiaries
Capitation
Commercial markets
Enrollments
Health care expenditures
Health insurance
Health insurance exchanges
Health maintenance organizations
HMOs
Insurance coverage
Medicaid
Medicare
Patient Protection & Affordable Care Act 2010-US
Reimbursement
Studies
Subsidies
Citations: Items that this one cites
Items that cite this one
Online Access:Get full text
Tags: Add Tag
No Tags, Be the first to tag this record!
Description
Summary:Within Medicare, the Medicare Advantage program has historically attracted better risks-healthier, lower-cost patients-than has traditional Medicare. The disproportionate enrollment of lower-cost patients and avoidance of higher-cost ones during the 1990s-known as favorable selection-resulted in Medicare's spending more per beneficiary who enrolled in Medicare Advantage than if the enrollee had remained in traditional Medicare. We looked at two measures that can indicate whether favorable selection is taking place-predicted spending on beneficiaries and mortality-and studied whether policies that Medicare implemented in the past decade succeeded in reducing favorable selection in Medicare Advantage. We found that these policies-an improved risk adjustment formula and a prohibition on monthly disenrollment by beneficiaries-largely succeeded. Differences in predicted spending between those switching from traditional Medicare to Medicare Advantage relative to those who remained in traditional Medicare markedly narrowed, as did adjusted mortality rates. Because insurance exchanges set up under the Affordable Care Act will employ similar policies to combat risk selection, our results give reason for optimism about managing competition among health plans. [PUBLICATION ABSTRACT]
ISSN:0278-2715
1544-5208
DOI:10.1377/hlthaff.2012.0345