Regulatory Redistribution in the Market for Health Insurance
American Economic Journal: Applied Economics
vol. 7,
no. 2, April 2015
(pp. 109-34)
(Complimentary)
Abstract
Community-rating regulations equalize the insurance premiums faced by the healthy and the unhealthy. Intended reductions in the unhealthy's premiums can be undone, however, if the healthy forgo coverage. The severity of this adverse selection problem hinges largely on how health care costs are distributed across market participants. Theoretically, I show that Medicaid expansions can combat adverse selection by removing high cost individuals from the relevant risk pool. Empirically, I find that private coverage rates improved significantly in community-rated markets when states expanded Medicaid's coverage of relatively unhealthy adults. The effects of these health policy instruments are fundamentally linked. (JEL G22, G28, H51, H53, I13, I18, I38)Citation
Clemens, Jeffrey. 2015. "Regulatory Redistribution in the Market for Health Insurance." American Economic Journal: Applied Economics, 7 (2): 109-34. DOI: 10.1257/app.20130169Additional Materials
JEL Classification
- G22 Insurance; Insurance Companies; Actuarial Studies
- G28 Financial Institutions and Services: Government Policy and Regulation
- H51 National Government Expenditures and Health
- H53 National Government Expenditures and Welfare Programs
- I13 Health Insurance, Public and Private
- I18 Health: Government Policy; Regulation; Public Health
- I38 Welfare, Well-Being, and Poverty: Government Programs; Provision and Effects of Welfare Programs
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