Addressing Plan Selection Bias With Risk Adjustment: Milliman Insights on Morbidity and Employer Contributions

Employees value choice when it comes to health benefits. When employers facilitate these choices, the method for setting employee premium contributions can create selection bias toward certain options. Selection bias happens when a sicker and more costly population tends to choose one option over another. In order to reduce the selection bias, employers should adjust each option for morbidity. Risk adjustment is used to adjust applicable costs of two or more cohorts of people so all cohorts can be compared as if each had the same morbidity.

Topics Include:

• The concepts of selection bias and risk adjustment
• The implications and justification for applying risk adjustment
• The methodologies involved in setting employer contribution rates and application of risk adjustment
• Illustrative examples in the application of risk adjustment

Additional Tags: Slef-Insurance, Self-Funding, TPA, Actuarial

Event Date: Thursday, January 16, 2020

Event Webpage (Available for subscribers only)

Category(s): Analytics, Employers, Health Plans

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