You Already Have a Credit Risk Score — How About Adding a Health Risk Score?

ARLINGTON, Va. — All patients should have a “health risk score” that follows them over time, Peter Orszag, CEO of financial advisory at Lazard, in New York City, said at Academy Health’s Health Datapalooza meeting here.

“We all have a credit risk score that is evaluated by these three different [credit] agencies,” Orszag said in a remote presentation on Tuesday. Similarly, “we should all have an individual health risk score that follows us over time.”

A health risk score would give insurers a reason to invest more in patients’ health, he said. Patients often switch insurers after a few years, so insurance companies have no reason to invest in making patients healthier; their company likely won’t see any reduced insurance claims, because the improvement won’t bear fruit until the patient is with another insurer.

“What’s the point of paying for something that someone else is going to benefit from?” said Orszag, who served as director of the Office of Management and Budget (OMB) in the Obama administration.

Instead, “if we had something like this kind of individualized health risk score, then there can be payment from one payer to another depending on what happened to my risk score while I was covered by Health Insurance Company 1 instead of [Company] 2 — giving them an incentive to invest in the things that will improve my health score, and eliminating this kind of time consistency problem that is at least a partial cause of why we don’t make many of the investments we should make,” he said.

Another benefit of a health risk score is that it would solve some of the problems with today’s risk adjusters, said Orszag. Risk adjusters are the calculations used by insurers to account for how sick a patient population is, for purposes of paying providers.

The current risk adjusters don’t work very well, according to Orszag. “As one example, the risk adjustment that underlies Medicare Advantage — and a lot of the risk adjustment throughout the healthcare system — is based on taking healthcare claims at one point in time and doing a cross section. If you ask, ‘How much variation in spending can those risk adjusters explain?’, the short answer is: not very much … Depending on the measure that you use, 80% to 90% of healthcare spending is not explained by those risk adjusters.”

And of that 80% to 90% that isn’t explained, there is likely a portion that could be attributed to underlying patient characteristics which aren’t at all accounted for, he continued. “In other words, the risk adjusters are just really bad at the job that they have been assigned, in part because they are exclusively based on claims in a cross-sectional way that doesn’t follow people over time.”

That’s why the risk score would be “fundamentally different from the risk adjusters that are used today, because it is associated with me and it follows me over time,” said Orszag. In addition, “it’s based on a wider array of data than just my health insurance claims,” ​​and “can be tied into my health record and a whole variety of other sources of data, and give a much better indication of my health.”

Orszag also discussed the lessons that the COVID-19 pandemic can teach regarding healthcare spending, especially since many people visited doctors and hospitals a lot less during the pandemic. “There was a whole bunch of care that was just missing in 2020, that we then didn’t really fully catch up on,” he said. “And so the question becomes, what does that teach us?”

His answer: it should make people at least want to examine whether the “missing” care was actually necessary. “If we do a very simple analysis and look across the country at states where there was the biggest reduction in outpatient visits and the kind of discretionary care saw the biggest declines during 2020, and the mortality rate in 2021, what you see is actually a negative relationship — that is, it looks like all that additional healthcare utilization that just went missing … was not associated with any higher mortality.”

If anything, the reverse appears to be true: “States where there was the biggest decline in this kind of discretionary care were the states where the excess mortality rate from non-COVID cases was increased the least,” he said. “This should at least raise questions about whether there is plenty that we can do to achieve a better cost-quality tradeoff in healthcare.”

  • Joyce Frieden oversees MedPage Today’s Washington coverage, including stories about Congress, the White House, the Supreme Court, healthcare trade associations, and federal agencies. She has 35 years of experience covering health policy. Follow

Leave a Comment