Physician Selection

Health economists frequently examine the effect of physician payment method on the provision of medical services.  It is often found that patients whose doctors are compensated via capitation or salaried schemes receive fewer services than patients whose doctors are compensated through a fee for service mechanism.  This finding is robust to a variety of medical settings…

Information on Referrals

Years ago, when someone needed care from a doctor they visited the physician directly whether they were a general practitioner or a specialist.  Nowadays, it is rarer for patients to visit a specialist without a referral.  The typical referral comes from a primary care physician, but it is also common for a specialist to refer…

Measuring adverse selection in managed health care

Introduction  Much of health care today is paid for by managed care plans.  If the managed care plans are profit maximizers–which I assume them to be–then they face a tradeoff.  By offering a lower quality of care, they will make more money; but lowering the quality of care reduces the demand for their insurance product. …

Information asymmetry, insurance and the decision to hospitalize

There is a dynamic relationship between generalists and specialists.  Currently, 4.5% of visits to PCPs result in a referral.  A RAND study and my own investigation of the 1998-1999 Community Tracking Survey show that about 10% of individuals are hospitalized at least once each year.  How should we model the decision patients face between generalist and specialist care.…

Adverse Selection and the purchase of in Medigap Insurance

Jason has insurance and his brother Nosaj does not.  Jason utilizes more medical services than Nosaj.  Is this situation occuring because Jason is truly sicker than Nosaj (adverse selection), or is this because since Jason has insurance, medical services are cheaper for him than Nosaj (moral hazard)?  Disentangling the problems of moral hazard and adverse selection…

Managed Care and Employer Health Insurance Offerings

Daniel Polsky and Sean Nicholson have two papers which aim to look at employer health insurance offerings.  The first [Polsky, Nicholson (2004)] tries to estimate the factors driving the cost differences between HMO plans and non-HMO (eg: PPO, indemnity) plans.  The authors deconstruct the cost differences into three factors: Utilization Effect: this occurs if individuals…

Employment and Adverse Selection

According to the Kaiser Family Foundation, 160 million Americans receive their health insurance from their employers.  That figure represents three out of five non-elderly individuals.  Many experts argue that using employer provided health insurance eliminates the problem of adverse selection by forming an insurance pool around a non-medical issue (employment).  Jayanta Bahattacharya and William Vogt…

PacAdvantage: Adverse Selection Death Spiral

The adverse selection death spiral has reared its ugly head again.  PacAdvantage, an insurance pooling company for 6000 small and medium sized businesses in California has closed its doors.  The Sacramento Business Journal reports (“Backer pulls plug on PacAdvantage health purchasing pool“) that the three remaining insurers underwriting the plan have pulled out.   Michael Holt of The…

How profitable is risk selection?

Many papers on health insurance worry about the problem of adverse selection.  Critics of HMOs claim that the fact that HMOs have lower costs is not due to more efficient provision of services nor the limitation of the provision of services, but instead largely caused by the fact that the people who choose to enroll…