NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH
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Wynand P. van de Ven

Erasmus University
PO Box 1738
3000 DR Rotterdam
The Netherlands

E-Mail: vandeven@bmg.eur.nl
Institutional Affiliation: Erasmus University

NBER Working Papers and Publications

September 2015Improving Risk Equalization with Constrained Regression
with Richard van Kleef, Thomas McGuire, Rene van Vliet: w21570
Several countries rely on regulated health plan competition to combine affordability of health plans with incentives for cost containment and quality improvement. Typically, these policies include premium regulation supplemented with risk equalization to compensate health plans for predictable variation in medical spending. An extensive empirical literature shows, however, that even the state-of-the-art risk equalization models undercompensate some risk groups and overcompensate others, leaving systematic incentives for risk selection. A natural approach to reducing under or overcompensation for a group is to include membership in that group as an indicator in the risk equalization model. For several types of indicators, however, inclusion can be problematic or infeasible. This paper intro...

Published: van Kleef, R.C., McGuire, T.G., van Vliet, R.C.J.A. et al. Eur J Health Econ (2017) 18: 1137. https://doi.org/10.1007/s10198-016-0859-1 https://doi.org/10.1007/s10198-016-0859-1

 
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