Steps to reduce favorable risk selection in medicare advantage largely succeeded, boding well for health insurance exchanges.

ABSTRACT: Within Medicare, the Medicare Advantage program has historically attracted better risks-healthier, lower-cost patients-than has traditional Medicare. The disproportionate enrollment of lower-cost patients and avoidance of higher-cost ones during the 1990s-known as favorable selection-resulted in Medicare's spending more per beneficiary who enrolled in Medicare Advantage than if the enrollee had remained in traditional Medicare. We looked at two measures that can indicate whether favorable selection is taking place-predicted spending on beneficiaries and mortality-and studied whether policies that Medicare implemented in the past decade succeeded in reducing favorable selection in Medicare Advantage. We found that these policies-an improved risk adjustment formula and a prohibition on month

SUBMITTER: Newhouse JP 

PROVIDER: S-EPMC3535470 | biostudies-literature | 2012 Dec

REPOSITORIES: biostudies-literature