The Risk-Adjustment Debate

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Abstract
Risk adjustment refers to the adjustment of payments to health plans (or to doctors) to reflect more accurately the actual health status or recent medical experience of patients. Risk adjustment has become an issue because payments by governments, employers, and individuals largely do not take into account differences in the health of patients among (or within) health plans. If plans receive the same unadjusted premium for each subscriber, then the plan with healthier members reaps an unearned windfall, whereas plans with sicker populations of patients face unfair losses.The problem occurs at three distinct levels. First, health plans that receive . . .

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