Journal
HEALTH ECONOMICS
Volume 27, Issue 12, Pages 1945-1962Publisher
WILEY
DOI: 10.1002/hec.3812
Keywords
medical expenditure prediction; payment system reform; public health insurance; risk adjustment
Funding
- National Natural Science Foundation of China [71503014] Funding Source: Medline
- the Insurance Society of China [ISCKT2017-N-1-4] Funding Source: Medline
- the research seed fund of the School of Economics in Peking University Funding Source: Medline
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Reforming the payment system of public health insurance from fee-for-service to more efficient alternative schemes has become an urgent policy issue in developing countries. Using a large sample of administrative data drawn from China, we examine a variety of econometric models for predicting the medical expenditures of individuals. We show that the standard ordinary least squares model performs relatively well compared with other models. We then propose two alternative payment schemes on risk-adjusted capitation. The first is a prospective capitation model and the second incorporates both prospective and retrospective features. We simulate the corresponding payments based on model predictions and evaluate the payment/cost ratios for health care providers. The results show that the prospective capitation method generates smaller financial fluctuation, suggesting that policymakers may prefer this method to achieve a smooth transition.
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