Controlling Indirect Selection under Healthcare Reform - Society of ...

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Appendix 174 differentials between the poorest and wealthiest people are in the 30-50% range with an average of 40% – about 10% more than the concurrent spreads. This was expected, based on the conceptual model, as concurrent risk adjustment should account for some of the differential incident condition costs attributable to income. With prospective risk adjustment there is an unexpected flattening of the income effects between middle and high income people – both categories have costs on average 12% less than expected. (In contrast on concurrent basis middle income people cost 6% less than expected and high income people cost 11% less than expected.) The conceptual model provides no explanation for this anomaly. 36 As a result of the anomaly, most of the income effect tests associated with Hypothesis 2 are not significant. The following table summarizes Table 1 and Table 2: 36 I can hypothesize that while high income people are healthier than middle income people with respect to prevalent and incident conditions, that they are more aggressive consumers of care. Exploring this hypothesis is beyond the scope of the paper.
Appendix 175 Figure 12 Income Effect Summary Concurrent Risk Prediction Prospective Risk Prediction Family Income Category n Average Income Effect n Average Income Effect 1 POOR/NEGATIVE 18,441 18% 9,326 28% 2 NEAR POOR 5,638 6% 2,939 11% 3 LOW INCOME 14,825 3% 7,472 1% 4 MIDDLE INCOME 24,874 -6% 12,503 -12% 5 HIGH INCOME 24,171 -11% 12,489 -12% Total 87,949 44,729 Mean 0% 0% Income Effect Differential Poor vs. High 28% 40% Low vs. High 13% 14% Low&Middle Combined vs. High 8% 6% Although there is some question of whether high income people are different than middle income people when risk is adjusted on a prospective basis, overall there appears to be statistically significant income effects. The next question is whether these effects have potential business significance. The first step is calculating the business effect. This is done by combining the distributions from Figure 5 with the respective average income effects (in bold) from Figure 7. The resulting business effect estimates are:
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Controlling Indirect Selection unde
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iv ACKNOWLEDGEMENTS I am thankful f
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vi C. Regulatory Timing ...........
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viii 22. Profit = .................
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x MEPS P&C PBM PHI PPACA RA SES SOA
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I. INTRODUCTION Consultants from th
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3 This paper is meant to be a prime
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5 1970; Rothschild & Stiglitz, 1976
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7 the right side of the bar. With r
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9 limits choice for other high risk
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11 2. Process. Direct selection is
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13 just a department. This expansiv
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15 F. Consumers Demand Change Direc
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17 2. Risk adjustment (PPACA, Secti
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19 consumer selection. This section
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21 Whether the adjustment occurs vi
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23 risk. 43 Today’s risk adjustme
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25 Figure 8 Other Predictive Variab
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27 Genetics are also important. A d
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29 generally socially and economica
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31 of costs and very few have $50,0
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33 have no recent diagnoses or pres
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35 Unidentified Sick are unidentifi
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37 Figure 15 Demonstration: Financi
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39 The benefits of indirect selecti
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41 get insurance or gets it on less
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43 Assuming that at least some insu
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III. INDIRECT SELECTION UNDER HEALT
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47 insurers should use a Lifestyle
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49 Figure 19 Neighborhood-Level Dat
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51 This list of data elements align
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53 Consumer marketing databases pro
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55 Figure 23 New Business Predictiv
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57 diabetics while finding ways to
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59 risk insureds, “skimping” wi
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61 Figure 28 The model is consisten
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63 Insurers will rely upon predicti
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65 that they are related to the cha
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67 profitable and the second neighb
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69 relevant to insurers with a larg
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IV. PUBLIC POLICY CHALLENGES Indire
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73 will never be a clear line betwe
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75 healthcare cost variance outside
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77 to educate poor children. Althou
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79 Figure 30 Dynamic System: The ke
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81 regulators. If regulators don’
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83 regulatory front, while struggli
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85 in Chapter 3. The discussion wil
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87 1A: Include family income in ris
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89 example, assigning a risk premiu
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91 2. Market Entry Regulators desig
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93 2A: Individual insurance only fr
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95 “restricting choices”. It is
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97 adverse consumer selection. Whil
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99 3B: Fixed benefit designs. It is
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101 There is general consensus in t
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103 4D: Agent restrictions. At a mi
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105 Figure 35 Regulatory Options 5
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107 6. Post-Enrollment Consumer sel
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109 6E: Disenrollment per head pena
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111 While insurers cannot directly
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113 the insureds who have a diagnos
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115 E. Monitoring If regulations ar
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117 enrollment and disenrollment ra
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119 publicly discussed. Discussing
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121 Such a strategy is dependent up
Page 133 and 134: REFERENCES AAA. (2009). Issue Brief
Page 135 and 136: 125 Byrne, S. K. (2008). Healthcare
Page 137 and 138: 127 Gallo, L. C., Penedo, F. J., Ex
Page 139 and 140: 129 Lewin Group. (2010). Individual
Page 141 and 142: 131 Riley, T. (2010). Reform has a
Page 143 and 144: 133 van Barneveld, E., van Vliet, R
Page 145 and 146: APPENDIX Health Insurance Risk Adju
Page 147 and 148: Appendix 137 ABSTRACT The U.S. Pati
Page 149 and 150: Appendix 139 BACKGROUND As expresse
Page 151 and 152: Appendix 141 not eligible for subsi
Page 153 and 154: Appendix 143 Starting in 2011 insur
Page 155 and 156: Appendix 145 1) Current conditions
Page 157 and 158: Appendix 147 First consider the lin
Page 159 and 160: Appendix 149 counter this argument.
Page 161 and 162: Appendix 151 Current Risk Adjustmen
Page 163 and 164: Appendix 153 Model 4 fits the risk
Page 165 and 166: Appendix 155 An examination of the
Page 167 and 168: Appendix 157 ANALYSIS Data Descript
Page 169 and 170: Appendix 159 Specifically, the anal
Page 171 and 172: Appendix 161 Equation 1 Proxy Expen
Page 173 and 174: Appendix 163 Expenditures have been
Page 175 and 176: Appendix 165 Equation 3 Normalized
Page 177 and 178: Appendix 167 The technical difficul
Page 179 and 180: Appendix 169 prediction residuals?
Page 181 and 182: Appendix 171 The lower income and h
Page 183: Appendix 173 RESULTS The results ar
Page 187 and 188: Appendix 177 LIMITATIONS The analys
Page 189 and 190: Appendix 179 Likewise, due to healt
Page 191 and 192: Appendix 181 DISCUSSION Even with t
Page 193 and 194: Appendix 183 Much of Jost’s timel
Page 195 and 196: Appendix 185 RECOMMENDATIONS Based
Page 197 and 198: Appendix 187 TABLES
Page 199 and 200: Appendix 189
Page 201 and 202: Appendix 191
Page 203 and 204: Appendix 193 REFERENCES AAA. (2010)
Page 205 and 206: Appendix 195 Diez Roux, A. A. (2001
Page 207 and 208: Appendix 197 McKinsey & Company. (2
Page 209 and 210: Appendix 199 WHO. (2005). Facing th
Page 211 and 212: TIA GOSS SAWHNEY Vita 201 Directo
Page 213 and 214: TIA GOSS SAWHNEY Vita 203 “Busine
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