Moral hazard and risk adjustment

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NETL
NSTL
Elsevier

外文摘要：© 2024 The AuthorWe analyse a model of optimal risk adjustment in competitive health-insurance markets which suffer from both ex-ante adverse selection and ex-post moral hazard. We find, firstly, that, unlike in an adverse-selection-only market, in an environment where also moral hazard is important, removing insurers’ selection incentives requires risk-adjustment payments that do not fully equalize costs among consumer types. Current practice of attempting to correct for all predictable cost differences among consumers is then misguided. Secondly, if the sponsor of the risk-adjustment system is not only concerned with eliminating selection distortions, but also wants to redistribute towards high-risk consumers, the required higher risk-adjustment payments will introduce selection distortions in high-risk consumers’ contracts. This leads to excessive equilibrium provision of care for those suffering severe health shocks. Finally, insurer market power creates countervailing incentives, helping the risk adjuster to combat selection distortions but working against a risk-adjustment regulation that also cares about redistribution.

外文关键词：

Competition in contractsCountervailing incentivesHealth insuranceMechanism designMoral hazardRisk adjustmentSelection

作者：

Zwart G.

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作者单位：

University of Groningen EEF and FEBRI

出版年：

2025

DOI：

10.1016/j.jhealeco.2024.102955

Journal of health economics

ISSN：0167-6296

年,卷(期)：2025.99(Jan.)

参考文献量35