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Can better risk adjustment mechanisms be devised for the small-employer health insurance market? The researchers devised a risk adjustor mechanism based on demographic information and a list of expensive, but not rare, diagnoses to assess the relative risk level of enrollees in each of the 23 plans offered by the Health Insurance Plan of California (HIPC) to its 44,000 enrolled individuals. The objective of the project was to provide policymakers with a working model of risk adjustment in a voluntary purchasing alliance for small employers.
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