Any characteristic, behavior, or condition which, based on history, utilization, or theory, is thought to directly influence susceptibility to a specific health problem, increase costs or result in increased utilization. In underwriting, a factor that is multiplied into the rate to offset some adverse parameter of the group. The expected per capita costs of health care services to a defined group in a specific future period. A pool of money that is at risk for being used for defined expenses. Commonly, if the pool money that is put at risk is not expended by the end of the year, some or all of it is returned to those managing the risk.
Funding comes from government or assessment on insurers.
Risk selection Occurrence when a disproportionate share of high or low users of care join a health plan. See Adverse Selection. The distribution of financial risk among parties furnishing a service. For example, if a hospital and a group of physicians from a corporation provide health care at a fixed price, a risk-sharing arrangement would entail both the hospital and the group being held liable if expenses exceed revenues. A method by which medical insurance premiums are shared by plan sponsors and participants.