Abstract

RIASCOS VILLEGAS, Álvaro J. Complementary Compensating Mechanisms of Exante Risk Adjustment in Colombian Competitive Health Insurance Market. Desarro. soc. [online]. 2013, n.71, pp.165-191. ISSN 0120-3584.  https://doi.org/10.13043/DYS.71.5.

Using the theory of optimal contracts in the presence of asymmetric information, this article rationalizes expost compensation mechanisms in competitive health insurance systems. I discuss the Colombian case exemplified by the Cuenta de Alto Costo (CAA). The main message is that, while a mechanism similar to the CAA is indeed needed, the current redistribution mechanism can be improved since it is unbalanced, a fundamental normative feature of any ex post redistribution of resources. Therefore, we propose an optimal redistribution mechanism based on Barros (2003), with the same informational requirements, in line with the basic objective of reducing incentives for risk selection and balanced. Additionally, since none of the above mechanisms aims to reward or punish the proper management of the disease for which redistribution takes place (currently only renal chronic disease) we further proposes a mechanism that, while maintaining the fundamental requirement of being balanced, partially controls for the proper management of the disease. The article concludes with a suggestion for further research on how to make an ex post redistribution in perfect harmony with the current exante risk adjustment mechanism.

Keywords : Risk selection; risk adjustment; optimal mechanisms.

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