Potential Pitfalls and Improvements to ACA’s Risk Adjustment 

Grant: #72675

Grantee Institution: The Urban Institute

Principal Investigator: Bowen Garrett, Ph.D.

Grant Period: May 15, 2015 – January 29, 2016

Budget: $145,429

This project is funded as part of the Robert Wood Johnson Foundation’s solicitation “Policy-Relevant Insurance Studies” (PRIS), which supports studies that address the macro and micro effects of policies related to health insurance. The goal of this project is to ensure that risk adjustment and related tools are designed, applied and enforced most effectively. Using the Medical Expenditure Panel Survey – Household Component, the researchers will estimate risk-adjustment models and computations that mimic those in the marketplaces. They will examine two research questions: (1) how effective is the ACA’s risk adjustment mechanism in curtailing the incentive to select patients on the basis of risk or expected profits; and (2) what improvements to methodology or countermeasures would be feasible and effective in further mitigating selection pressures or their negative effects.