Are Colombian sickness funds cream skimming enrollees? An analysis with suggestions for policy improvement.

One of the primary objectives of Colombian social health insurance reform was to increase competition among for-profit insurers. Unfortunately, the flat capitated formula creates an opportunity for sickness funds to maximize reimbursement gains by cream skimming--selecting against unhealthy individuals. This paper explores sickness fund selection behavior to evaluate the efficiency losses associated with the introduction of managed competition in Colombia.