Data Transformations to Improve the Performance of Health Plan Payment Methods

We present a general economic model that incorporates the previously overlooked two-way relationship between health plan payment and insurer actions. We then demonstrate our systematic approach for data transformations in two Medicare applications: underprovision of care for individuals with chronic illnesses and health care disparities by geographic income levels. Empirically comparing our method to two other common approaches shows that the “side effects” of these approaches vary by context, and that data transformation is an effective tool for addressing misallocations in individual health insurance markets.
Source: Journal of Health Economics - Category: Health Management Source Type: research