Need assistance in understanding the following questions so that I can provide summaries for each question. The reference is provided.
1. Would an HMO entering the Medicare market expect to experience favorable or adverse selection? Would the magnitude of the selection bias be larger or smaller for an HMO entering the commercial employee benefit market? The Medicaid market? (Getzen, 2010, p.132)
2. "What incentives does a capitated physician have to keep his patients happy? What incentive does an FFS physician have? If Mr. Jones is a cranky old man who smokes and drinks so much that his liver and other organs are going downhill, which payment system provides more incentive to keep Mr. Jones satisfied? Which provides the most incentive to render extra care? Which provides the most incentive to make sure that the level of care is optimized?" (Getzen, 2010, p.133)
1. I would say an HMO entering the Medicare market would lead to an adverse selection especially in the Medigap market, as it would be more feasible, functional and attractive to enter markets with higher Medigap premiums. Adverse selection has and can reduce the standard for claims in Medigap plans. Usually the impact is more significant in Parts A and B Medigap type plans than the larger plans. Aversion tends to make consumers more willing to share the risks (costs) of insurance (Morrissey, 2007; Desmond, Rice & Fox, 2007).
Typically, selection bias has more to do with what the expectations are based on the type of coverage and delivery system. Those who tend to be or get sick more often will end up paying more for health care insurance. As such, they are more likely to choose a FFS system. Additionally, many (not all) individuals who opt out of buying health care insurance, do so because they are fairly healthy. This is not as easily identified however. According to Getzen (2010) even though there is a large random aspect the way healthcare is utilized, there is still a great consistence and sizable persistence in usage. Therefore, selection bias tends to endure in HMO settings. In Non-HMO settings such as Medicaid, the key to cost containment in managed care is selectively ...
The solution discusses health insurance issues.