Reports Outline Health Economics Study Results from Erasmus University (Exploiting Incomplete Information In Risk Adjustment Using Constrained Regression)

2020 NOV 05 (NewsRx) -- By a News Reporter-Staff News Editor at Economics Daily Report -- Data detailed on Economics - Health Economics have been presented. According to news originating from Rotterdam, Netherlands, by NewsRx correspondents, research stated, “Health insurance markets with regulated premiums typically include risk adjustment (RA) to mitigate selection incentives. Even the most sophisticated RA models, however, tend to undercompensate (overcompensate) insurers for people in poor (good) health.”

Our news journalists obtained a quote from the research from Erasmus University, “One reason RA models are imperfect is that some predictors cannot serve as risk adjustor because they are not available for theentirepopulation. This paper applies an indirect method to exploit such predictive information: constrained regression. Our focus is on the Netherlands where morbidity data from general practitioners (GPs) are available for only around 10 percent of the population. We combine thisincompletesample withcompletedata (N=16.7million) on spending and risk adjustors. In a first step, we find that GP morbidity data are predictivenet ofthe Dutch RA model. In a second step, we use the GP morbidity data to impose constraints on the coefficients of the RA model. This results in more RA funds being sent to undercompensated groups. Using a split-sample approach, we simulate two constrained regression models and compare the outcomes to those of an unconstrained model.”

According to the news editors, the research concluded: “Our findings indicate that constrained regression can be a useful tool to exploit predictive information that is available for only a sample of the population.”

This research has been peer-reviewed.

For more information on this research see: Exploiting Incomplete Information In Risk Adjustment Using Constrained Regression. American Journal of Health Economics, 2020;6(4):477-497. American Journal of Health Economics can be contacted at: Univ Chicago Press, 1427 E 60TH St, Chicago, IL 60637-2954, USA.

The news correspondents report that additional information may be obtained from Richard C. van Kleef, Erasmus University, Erasmus Sch Hlth Policy & Management, Rotterdam, Netherlands. Additional authors for this research include Frank Eijkenaar, Rene C. J. A. van Vliet and Mark M. J. Nielen.

The direct object identifier (DOI) for that additional information is: https://doi.org/10.1086/710526. This DOI is a link to an online electronic document that is either free or for purchase, and can be your direct source for a journal article and its citation.

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