HIRP Research Brief

No. 3

Why Not the Best for the Chronically Ill?
January 1996


Stanley Jones


Premium adjustors to neutralize risk selection among health plans are the weakest component in the technology for assuring competitive markets. It will be many years before we have adjustors adequate to free health plans to invest in and market improved managed care to predictably high-cost chronically ill persons. For want of a fair premium, health plans are driven by risk selction to underinvest in and otherwise demarket care to these very employees and beneficiaries whose costs and care most need to be managed. To achieve best value for the chronically ill, large employer coalitions, Medicare, and Medicaid should consider radical new approaches, such as establishing separate prices for care to people with specific chronic conditions and purchasing such care both from health plans and directly from provider systems.

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