Key Issues in Developing an MCER Index
Wolfe next discussed a number of major questions that need to be addressed in developing an MCER index, with the authors’ position on each one:
- Should the index be an ex ante (prospective) or ex post (retrospective) measure? Wolfe emphasized that risk is inherently a prospective concept.
- Should the core unit be the individual or the family? Medical care economic risk is an individual concept, even though one’s insurance coverage may be at either the individual or the family level. One needs to start at the individual level and then aggregate up to the family level.
- How should underutilization or overutilization be treated? If people have particularly limited or generous coverage, should adjustments be made for both under- and overutilization? It is important to adjust particularly for underutilization, but both need to be kept in mind.
- Should the index be tied to a specific benefit package? Should the measure take a benefit package as is, whether it is a generous package or a very limited one? Or should the measure be based on a specific benefit package and a specified set of benefits in terms of medical risk? Wolfe said their answer is to work with a specific package, although the dimensions of the package have to be explicitly defined, including the extent of its generosity.
- Can such a measure be developed in a relatively short period of time? It is not particularly interesting to have an MCER index that measures risk from 5 years ago. If it takes that long, it is old information. Eventually there will be a trend, but it will not tell much about the success of policies today. Therefore, it is important to have a measure that is relatively easy to develop in a short period of time. The issue of data requirements comes up in this context.
- How complex should the measure be? One can get a more accurate medical care risk index for an individual if more information is obtained and used. But the cost of using more information is that developing the index is likely to take longer. So there is clearly a trade-off between complexity and pragmatic aspects in terms of speed and ease of creating the index.
- How should resources be captured, both in terms of the detail of coverage of individuals and their income? One aspect of this question is that people frequently use their assets, not just their current income flow, to cover medical care expenses. The issue is not so