Regulatory Redistribution in the Market for Health Insurance

Jeffrey Clemens

No 19904, NBER Working Papers from National Bureau of Economic Research, Inc

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 Medicaid expansions and community rating regulations are fundamentally linked.

JEL-codes: H51 H53 I13 I18 (search for similar items in EconPapers)
Date: 2014-02
New Economics Papers: this item is included in nep-hea, nep-ias and nep-reg
Note: EH PE
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Citations: View citations in EconPapers (3)

Published as Jeffrey Clemens, 2015. "Regulatory Redistribution in the Market for Health Insurance," American Economic Journal: Applied Economics, American Economic Association, vol. 7(2), pages 109-34, April.

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Related works:
Journal Article: Regulatory Redistribution in the Market for Health Insurance (2015)
Working Paper: Regulatory Redistribution in the Market for Health Insurance (2012)
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