Performance Pay in Insurance Markets
Evidence from Medicare
Bibliographic Data
| ID | 19317907 |
|---|---|
| Authors | Michele Fioretti (0000-0002-9388-3732, Institut d'Etudes Politiques de Paris), Hongming Wang (0000-0002-2207-8015, Hitotsubashi University) |
| Year | 2023 |
| Volume | 105 |
| Issue | 5 |
| Pages | 1128-1144 |
| Publication date | 2023-09-13 |
| Open Access | No |
| Type | ARTICLE |
| Venue | The Review of Economics and Statistics (JOURNAL) |
| Journal identifiers | ISSN: 0034-6535 • E-ISSN: 1530-9142 |
| Publisher | MIT Press (PUBLISHER • US) |
| DOI | 10.1162/rest_a_01127 |
| OpenAlex | W3120775126 |
| Language | EN |
| References cited | 52 |
Public procurement bodies increasingly resort to pay-for-performance contracts to promote efficient spending. We show that firm responses to pay-for-performance can widen the inequality in accessing social services. Focusing on the quality bonus payment initiative in Medicare Advantage, we find that higher quality-rated insurers responded to bonus payments by selecting healthier enrollees with premium differences across counties. Selection is profitable because the quality rating fails to adjust for differences in enrollee health. Selection inflated the bonus payments and shifted the supply of high-rated insurance to the healthiest counties, reducing access to lower-priced, higher-rated insurance in the riskiest counties
Actuarial science · Business · Economics · Agricultural risk and resilience · Healthcare Policy and Management · Healthcare Systems and Reforms
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| Highly cited | No |
|---|