Can Health Insurance Competition Work? Evidence from Medicare Advantage

Vilsa Curto, Liran Einav, Jonathan Levin and Jay Bhattacharya

No 20818, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: We estimate the economic surplus created by Medicare Advantage under its reformed competitive bidding rules. We use data on the universe of Medicare beneficiaries, and develop a model of plan bidding that accounts for both market power and risk selection. We find that private plans have costs around 12% below fee-for-service costs, and generate around $50 dollars in surplus on average per enrollee-month, after accounting for the disutility due to enrollees having more limited choice of providers. Taxpayers provide a large additional subsidy, and insurers capture most of the private gains. We use the model to evaluate possible program changes.

JEL-codes: D43 I11 I13 L13 L33 L51 (search for similar items in EconPapers)
Date: 2014-12
New Economics Papers: this item is included in nep-com, nep-hea and nep-ias
Note: EH IO PE
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Citations: View citations in EconPapers (19)

Published as Vilsa Curto & Liran Einav & Jonathan Levin & Jay Bhattacharya, 2021. "Can Health Insurance Competition Work? Evidence from Medicare Advantage," Journal of Political Economy, vol 129(2), pages 570-606.

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Related works:
Journal Article: Can Health Insurance Competition Work? Evidence from Medicare Advantage (2021)
Working Paper: Can Health Insurance Competition Work? Evidence from Medicare Advantage (2014)
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