Perceived Risk: The Link to Plan Selection and Future Utilization

• Published in: The Journal of risk and insurance Vol. 56; no. 1; pp. 67 - 82
• Main Authors: Homan, Rick K., Glandon, Gerald L., Counte, Michael A.
• Format: Journal Article
• Language: English
• Published: Malvern American Risk and Insurance Association 01-03-1989; John Wiley & Sons, Inc; Blackwell Publishing Ltd
• Subjects: Adverse selection; Average cost; Economic aspects; Fee for service health care; Financial risk; Health care expenditures; Health insurance; Health maintenance organizations; Health services; HMOs; Hospital patients; Medicare; Medicare-US; Older adults; Patient care; Payments; Reimbursement; Risk; Risk aversion; Statistical analysis; Studies; Tiles
• ISSN: 0022-4367; 1539-6975
• DOI: 10.2307/253015

Enrollment of Medicare beneficiaries in HMOs may reduce the costs of providing health care but has raised concerns over adverse selection and how to adjust reimbursement levels to compensate for this potential. An adjustment based on an individual's perceived health and financial risk may be more accurate than proposed demographic, prior use of health services or current health status adjusters. Results suggest that those in HMOs may be more sensitive to the extreme cost of hospitalization than those with fee-for-service insurance, and therefore were attracted to the comprehensive care offered by the HMO. In addition, HMO enrollees, face fewer barriers to seeking health care, thus may be higher utilizers in future periods.