Can Risk Adjustment prevent Risk Selection in a Competitive Long-Term Care Insurance Market?

摘要: textabstractWhen public long-term care (LTC) insurance is provided by insurers, they typically lack incentives for purchasing cost-effective LTC. Providing insurers with appropriate efficiency without jeopardizing access high-risk individuals requires, among other things, an adequate system of risk adjustment. While adjustment now widely adopted in health insurance, it unclear whether feasible LTC because its specific features. We examine the feasibility using a rich set linked nationwide Dutch administrative data. Prior use and demographic information are found to explain much variation, while prior expenditures important reducing predicted losses subgroups users. Nevertheless, selection against some easily identifiable persist. Moreover, utilization expenditure as adjusters dilutes efficiency, but multiyear data may reduce this disadvantage.