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Michael Geruso - One of the best experts on this subject based on the ideXlab platform.
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tradeoffs in the design of health plan payment systems fit power and balance
Journal of Health Economics, 2016Co-Authors: Michael Geruso, Thomas G McguireAbstract:In many markets, including the new U.S. Marketplaces, health insurance plans are paid by risk-adjusted capitation, sometimes combined with reinsurance and other payment mechanisms. This paper proposes a framework for evaluating the de facto insurer incentives embedded in these complex payment systems. We discuss fit, power and balance, each of which addresses a distinct market failure in health insurance. We implement empirical metrics of fit, power, and balance in a study of Marketplace payment systems. Using data similar to that used to develop the Marketplace risk adjustment scheme, we quantify tradeoffs among the three classes of incentives. We show that an essential tradeoff arises between the goals of limiting costs and limiting Cream Skimming because risk adjustment, which is aimed at discouraging Cream-Skimming, weakens cost control incentives in practice. A simple reinsurance system scores better on our measures of fit, power and balance than the risk adjustment scheme in use in the Marketplaces.
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tradeoffs in the design of health plan payment systems fit power and balance
National Bureau of Economic Research, 2014Co-Authors: Michael Geruso, Thomas G McguireAbstract:In many markets, including the new U.S. Exchanges, health insurance plans are paid by risk-adjusted capitation, in some markets combined with reinsurance and other payment mechanisms. This paper proposes three metrics for analyzing the insurer incentives embedded in these complex payment systems. We discuss fit, power and balance, each of which addresses a distinct market failure in health insurance. We implement these metrics in a study of Exchange payment systems with data similar to that used to develop the Exchange risk adjustment scheme and quantify the empirical tradeoffs among the metrics. We show that an essential tradeoff arises between the goals of limiting costs and limiting Cream Skimming because risk adjustment, which is aimed at discouraging Cream-Skimming, is in fact tied to costs. We find that a simple reinsurance system scores better on fit, power and balance than the risk adjustment scheme in use in the Exchanges.
Yiu Por Chen - One of the best experts on this subject based on the ideXlab platform.
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Cream-SKIMMER OR UNDERDOG? A CASE STUDY OF LABOR TYPE SELECTIVITY IN A RURAL LABOR TRAINING PROGRAM IN CHINA
The Singapore Economic Review, 2020Co-Authors: Yiu Por ChenAbstract:The mismatch between a laborer’s abilities and the goals set forth by a training program is one of the most pressing concerns for a labor training program. This paper looks at the incentives for a laborer to enter a rural labor training program and demonstrates a clear method of analyzing the participation issues using instrumental regressions on the data collected from a case study a “poverty city” in the Zhejiang province, China. This paper shows that a pre-program wage drop may induce workers of a higher caliber to enter the training program and cause a “Cream-Skimming” effect on its outcome because of the S-shaped labor supply curve for the rural population who live in poverty. The result of the Cream-Skimming effect enhances the traditional view that a pre-program wage drop may reduce “opportunity cost” to enter a training program. This extension can be handy to revise future designs of rural labor training programs.
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Cream-Skimmer or Underdog? Labor Type Selectivity, Pre-Program Wage, and Rural Labor Training Program Outcome
2009Co-Authors: Yiu Por ChenAbstract:The mismatch between laborer's abilities and the target subject of the training program is one of the most primary concerns for a labor training program. The ability of different workers may significantly affect the outcomes of a labor training program. The objective of this paper is to look at the incentive of labor to enter the program using data of a pilot study at Zhejiang province in China. This paper shows that the average distance of a training center in a village, and the active labor proportion in a family are the core instruments that influence participation of laborers in the rural labor training program. It suggests that rural laborers enter the training program due to the availability of abundant labor in a family, and the convenient conveyance cost to the training center. The "Ashenfelter's dip," a pre-program wage drop, on the other hand may induce workers of higher caliber to enter the training program and cause the "Cream-Skimming" effect to training program. The traditional view of "opportunity cost" to enter a training program is extended by the result of Cream Skimming and training and can be used in revising the future design of rural labor training program. Putting the Cream-Skimming effect and the training issues together, a better accountability and governance of the training program which actively takes into account of rural laborer needs may be called for.
Thomas G Mcguire - One of the best experts on this subject based on the ideXlab platform.
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tradeoffs in the design of health plan payment systems fit power and balance
Journal of Health Economics, 2016Co-Authors: Michael Geruso, Thomas G McguireAbstract:In many markets, including the new U.S. Marketplaces, health insurance plans are paid by risk-adjusted capitation, sometimes combined with reinsurance and other payment mechanisms. This paper proposes a framework for evaluating the de facto insurer incentives embedded in these complex payment systems. We discuss fit, power and balance, each of which addresses a distinct market failure in health insurance. We implement empirical metrics of fit, power, and balance in a study of Marketplace payment systems. Using data similar to that used to develop the Marketplace risk adjustment scheme, we quantify tradeoffs among the three classes of incentives. We show that an essential tradeoff arises between the goals of limiting costs and limiting Cream Skimming because risk adjustment, which is aimed at discouraging Cream-Skimming, weakens cost control incentives in practice. A simple reinsurance system scores better on our measures of fit, power and balance than the risk adjustment scheme in use in the Marketplaces.
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tradeoffs in the design of health plan payment systems fit power and balance
National Bureau of Economic Research, 2014Co-Authors: Michael Geruso, Thomas G McguireAbstract:In many markets, including the new U.S. Exchanges, health insurance plans are paid by risk-adjusted capitation, in some markets combined with reinsurance and other payment mechanisms. This paper proposes three metrics for analyzing the insurer incentives embedded in these complex payment systems. We discuss fit, power and balance, each of which addresses a distinct market failure in health insurance. We implement these metrics in a study of Exchange payment systems with data similar to that used to develop the Exchange risk adjustment scheme and quantify the empirical tradeoffs among the metrics. We show that an essential tradeoff arises between the goals of limiting costs and limiting Cream Skimming because risk adjustment, which is aimed at discouraging Cream-Skimming, is in fact tied to costs. We find that a simple reinsurance system scores better on fit, power and balance than the risk adjustment scheme in use in the Exchanges.
Christopher Taber - One of the best experts on this subject based on the ideXlab platform.
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Estimating the Cream Skimming Effect of School Choice
Journal of Political Economy, 2015Co-Authors: Joseph G. Altonji, Ching-i Huang, Christopher TaberAbstract:We derive a formula to determine the degree to which a school choice program may harm public school stayers by luring the best students to other schools. The "Cream Skimming" effect is increasing in the degree of heterogeneity within schools, the school choice take-up rate of strong students relative to weak students, and the dependence of school outcomes on student body quality. We use the formula to investigate the Cream Skimming effect of hypothetical voucher programs on the high school graduation rate and other outcomes of the students who would remain in public school. We find small effects across a wide variety of model specifications and types of modest voucher programs.
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Estimating the Cream Skimming Effect of School Choice
2010Co-Authors: Joseph G. Altonji, Ching-i Huang, Christopher TaberAbstract:We develop a framework that may be used to determine the degree to which a school choice program may harm public school stayers by luring the best students to other schools. This framework results in a simple formula showing that the "Cream-Skimming" effect is increasing in the degree of heterogeneity within schools, the school choice takeup rate of strong students relative to weak students, and the importance of peers. We use the formula to investigate the effects of a voucher program on the high school graduation rate of the students who would remain in public school. We employ NELS:88 data to measure the characteristics of public school students, to estimate a model of the private school entrance decision, and to estimate peer group effects on graduation. We supplement the econometric estimates with a wide range of alternative assumptions about school choice and peer effects. We find that the Cream Skimming effect is negative but small and that this result is robust across our specifications.
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What Do Bureaucrats Do? The Effects of Performance Standards and Bureaucratic Preferences on Acceptance into the Jtpa Program
1996Co-Authors: James J. Heckman, Jeffrey A. Smith, Christopher TaberAbstract:Bureaucratic performance standards are featured in many proposals to increase efficiency in government. These standards reward bureaucrats on the basis of measured outcomes. The performance standards system created under the Job Training Partnership Act (JTPA) of 1982 is often cited as a successful prototype. Under the JTPA system, local training centers receive monetary rewards based on the employment levels and wage rates attained by their trainees upon completion of the program. Critics of the JTPA performance standards system argue that it creates an incentive for program managers to encourage case workers to `Cream-skim' the most employable applicants into the program. We examine this issue by analyzing the determinants of acceptance into JTPA among applicants at a training center for which we have data on everyone who applied over a two year period. We find that case workers prefer to accept the least employable applicants, rather than the most employable as suggested by the Cream-Skimming story. This evidence indicates that concerns about Cream-Skimming in JTPA may be exaggerated. Instead, the performance standards system may operate as a countervailing force against the preferences of case workers. Using experimental data from the recent National JTPA Study, we also determine whether or not case workers accept those applicants with higher expected gains from the program. Our evidence only weakly supports this hypothesis.
Andrew Mceachin - One of the best experts on this subject based on the ideXlab platform.
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A Descriptive Analysis of Cream Skimming and Pushout in Choice versus Traditional Public Schools
Education Finance and Policy, 2020Co-Authors: Adam Kho, Ron Zimmer, Andrew MceachinAbstract:One of the controversies surrounding charter schools is whether these schools may either “Cream skim” high-performing students from traditional public schools or “pushout” low-achieving students or students with discipline histories, leaving traditional public schools to educate the most challenging students. In this study, we use longitudinal statewide data from Tennessee and North Carolina and linear probability models to examine whether there is evidence consistent with these selective enrollment practices. Because school choice programs managed by districts (magnet and open enrollment programs) have a similar ability to Cream skim and pushout students, we also examine these outcomes for these programs. Across the various school choice programs, magnet schools have the most evidence of Cream Skimming, but this might be expected as they often have selective admissions. For charter schools, we do not find patterns in the data consistent with Cream Skimming, but we do find evidence consistent with pushout behaviors based on discipline records. Finally, some have raised concerns that students may be pushed out near accountability test dates, but our results suggest no evidence consistent with this claim.