Suchergebnisse

To gauge the competitiveness of the group health insurance industry, I investigate whether health insurers charge higher premiums, ceteris paribus, to more profitable firms. Such "direct price discrimination" is feasible only in imperfectly competitive settings. Using a proprietary national database of health plans offered by a sample of large, multisite firms from 1998–2005, I find firms with positive profit shocks subsequently face higher premium growth, even for the same health plans. Moreover, within a given firm, those sites located in concentrated insurance markets experience the greatest premium increases. The findings suggest health care insurers are exercising market power in an increasing number of geographic markets. (JEL G22, I11, I18, L11, L25)

This dissertation includes three chapters on the health insurance markets established by the Affordable Care Act (ACA), known as exchanges. Chapter 1 estimates the demand for each plan in the California exchange using a discrete choice model. The model incorporates heterogeneity in consumer preferences and in product characteristics, including hospital and primary care physician (PCP) networks. Endogeneity of prices is addressed using networking hospital costs as instruments, and prices for any given plan can vary across consumers within a market. Consumers are highly sensitive to prices, with market shares declining by 3%-5% for just a $1 increase in the premium. Demand also responds to hospital and PCP networks, but to a relatively small degree. Along the take-up margin, a $1 increase in premium subsidy increases take-up by 1.4%. Chapter 2 uses a structural model of demand and supply to examine how two insurance market regulations--community rating and risk adjustment--affect prices and enrollment in the ACA exchange in California. Without risk adjustment, community rating in the ACA would lead to a significant reduction in enrollment in desirable plans and in take-up overall. Risk adjustment under the ACA roughly restores relative shares across plans to what they would be without community rating; however, the reduction in take-up is not restored. An alternative risk adjustment method can increase enrollment by 3.0% and would have little impact on government spending. Chapter 3, written jointly with Isaac Menashe and Wesley Yin, examines the impact of information on insurance take-up in the ACA. We exploit experimental variation in the information mailed to 87,000 households in California's exchange to study the role of frictions in insurance take-up. We find that a basic reminder of the enrollment deadline raised enrollment by 1.4 pp (or 16 percent). Compared to the reminder alone, also reporting personalized subsidy benefits increases take-up among low-income individuals, but decreases take-up among higher-income individuals. This is despite reminder-only recipients eventually observing their subsidies before purchase. Finally, the letter interventions induced healthier individuals into the market, lowering aggregate spending risk by 5.9 percent, suggesting these interventions can improve both enrollment and average market risk.

This paper studies the impact of advertising as a channel for risk selection in Medicare Advantage. We provide evidence that insurer advertising is responsive to the gains from risk selection. Then we develop and estimate an equilibrium model of Medicare Advantage with advertising, allowing rich individual heterogeneity. Our estimates show that advertising is effective in attracting healthy individuals who are newly eligible for Medicare, contributing to advantageous selection into Medicare Advantage. Moreover, risk selection through advertising substantially lowers premiums by improving insurers' risk pools. The distributional implication is that unhealthy consumers may be better off through cross-subsidization from healthy individuals. (JEL D81, G22, I13, I18, M37)

AbstractThis paper highlights the idea that increasing the length of insurance contracts can reduce adverse selection in health insurance markets while preserving community rating. Private health insurance contracts in the United States have short, one‐year terms, even though health risks may be serially correlated. Intuitively, because risk is mean‐reverting, longer contracts allow for pooling of risk within individuals over time, as opposed to just across individuals with traditional short‐term contracts. In equilibrium, such horizon effects lead to lower premiums and greater coverage. The mechanism depends on two key conditions. First, the pooling of risk within individuals is the greatest when mean reversion in risk is intermediate. Second, two‐sided commitment is present to preserve community rating. Counterfactual analysis using administrative claims data illustrates that a simple reform that implements two‐year instead of one‐year contracts could increase equilibrium coverage and yield non‐trivial welfare gains on net, in spite of restricting consumer choice.