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Cream-skimming, incentives for efficiency and payment system
1Faculdade de Economia, Universidade Nova de Lisboa, Travessa Estêvão Pinto, P-1099-032 Lisboa, Portugal. ppbarros@fe.unl.pt
Journal of Health Economics
|April 10, 2003
Summary
This study introduces a novel health care transfer system designed to eliminate risk selection and promote provider efficiency. The system balances upfront payments with end-of-period adjustments to incentivize fair competition.
Area of Science:
- Health economics
- Healthcare policy
- Public health
Background:
- Healthcare reform proposals often include risk adjustment/capitation systems.
- A significant challenge is the inherent incentive for risk selection within these systems.
- Existing literature focuses on mitigating risk selection while maintaining efficiency.
Purpose of the Study:
- To present a novel transfer system for healthcare payments.
- To address the issue of risk selection in capitation-based systems.
- To maintain provider efficiency alongside equitable risk adjustment.
Main Methods:
- Developing an extended linear payment system.
- Introducing a two-part transfer: an initial fixed payment and an ex-post fund.
- Defining unique contribution rules for the ex-post fund.
Main Results:
- The proposed transfer system can achieve both provider efficiency and eliminate risk selection under specific conditions.
- The system modifies traditional linear payment models.
- Novel contribution mechanisms to the ex-post fund are central to its success.
Conclusions:
- The developed transfer system offers a potential solution to the risk selection problem in healthcare.
- It provides a framework for more equitable and efficient healthcare payment models.
- Further research can explore the specific conditions under which this system is most effective.