Socioeconomic Background and Commercial Health Plan Spending

Risk-adjustment algorithms typically incorporate demographic and clinical variables to equalize compensation to insurers for enrollees who vary in expected cost, but including information about enrollees' socioeconomic background is controversial. METHODS: We studied 1 182 847 continuously insured 0 to 19-year-olds using 2008-2012 Blue Cross Blue Shield of Massachusetts and American Community Survey data. We characterized enrollees' socioeconomic background using the validated area-based socioeconomic measure and calculated annual plan payments using paid claims. We evaluated the relationship between annual plan payments and geocoded socioeconomic background using generalized estimating equations (? distribution and log link). We expressed outcomes as the percentage difference in spending and utilization between enrollees with high and low socioeconomic backgrounds. RESULTS: Geocoded socioeconomic background had a significant, positive association with annual plan payments after applying standard adjusters. Every 1 SD increase in socioeconomic background was associated with a 7.8% (95% confidence interval, 7.2% to 8.3%; P