Minimizing producer level risk selection in the health care market - an investigation of risk adjustments
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School of Business |
Bachelor's thesis
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Authors
Date
2017
Department
Major/Subject
Mcode
Degree programme
Taloustiede
Language
en
Pages
26
Series
Abstract
Because of the high skewness of health care expenditures, risk selection is a common problem in the health care markets causing significant wealth fare losses. In this thesis, I explore in the basic concepts of risk selection and risk adjustment, and analyze how the efficiency lost caused by risk selection in producer level can be minimized using risk adjustments. Basing my arguments on the previous literature, I claim that the best risk adjustment model is unlikely to be obtained by purely setting risk adjustors’ weights to statistically optimal ones. Instead, I argue that the question should be approached from the wider optimizing framework and a concentration should be put on incentives a risk adjustment model creates.Description
Thesis advisor
Mustonen, MikkoMurto, Pauli
Keywords
risk selection, risk adjustment, optimal risk adjustment, health care market