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Related Experiment Videos

Risk selection and benefits in the Medicare+Choice program.

Roger Feldman1, Bryan Dowd, Marian Wrobel

  • 1University of Minnesota, Division of Health Services Research and Policy, Mayo Mail Code 729, 420 Delaware Street, SE, Minneapolis, MN 55455-0392, USA. feldm002@umn.edu

Health Care Financing Review
|March 5, 2004
PubMed
Summary

Medicare+Choice (M+C) plans offering outpatient drug coverage attracted higher-risk beneficiaries. Dental coverage, however, was linked to favorable risk selection, potentially leading to underprovision of high-risk benefits.

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Area of Science:

  • Health economics
  • Medicare policy
  • Risk adjustment

Background:

  • Medicare+Choice (M+C) plans offered various benefits to beneficiaries.
  • Understanding the relationship between plan benefits and beneficiary risk selection is crucial for policy.
  • Inpatient encounter data provides a measure of beneficiary health risk.

Purpose of the Study:

  • To estimate the association between enhanced Medicare+Choice (M+C) benefits in 1999 and risk selection.
  • To determine which specific benefits influenced the attraction of higher-risk enrollees.
  • To explore the implications for benefit underprovision in a competitive market.

Main Methods:

  • Utilized inpatient encounter data to derive a measure of beneficiary risk.
  • Estimated the relationship between specific M+C plan benefits (e.g., outpatient drug coverage, dental coverage) and enrollee risk scores.

Related Experiment Videos

  • Analyzed the impact of varying annual limits on outpatient drug coverage.

    • Main Results:

    • Plans offering outpatient drug coverage attracted higher-risk individuals.
    • The risk score increased by 2.2% for drug coverage with annual limits <$800 and 3.6% for limits >$800.
    • Dental coverage was associated with favorable risk selection (attracting lower-risk individuals).

    Conclusions:

    • Outpatient drug benefits in Medicare+Choice (M+C) plans led to adverse risk selection.
    • Favorable risk selection was observed for benefits like dental coverage.
    • If M+C plans competed on benefits and untaxed rebates, benefits attracting high risks might be underprovided.