Prescription drug profiles as health risk adjusters in capitated payment systems: An applied econometric analysis.

A key policy issue debated in the context of introducing price competition in Medicare HMO market, is how to improve the demographic risk classification used by HCFA to adjust its capitation premiums to competing plans. This dissertation contributes to the debate at two levels. At the theoretical level, in Chapter 2 we show that improved risk classification system could reduce HCF..