Market Segmentation and Competition in Health Insurance

Michael Dickstein, Kate Ho and Nathaniel Mark
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Michael Dickstein: New York University
Kate Ho: Princeton University
Nathaniel Mark: U.S. Department of Justice

Working Papers from Princeton University. Economics Department.

Abstract: In the United States, households obtain health insurance through distinct market segments. We explore the economics of this segmentation by comparing coverage provided through small employers versus the individual marketplace. Using data from Oregon, we find households with group coverage spend 26% less on covered health care than households with individual coverage yet face higher markups. We develop a model of plan choice and health spending to estimate preferences in both markets and evaluate integration policies. In our setting, pooling can both mitigate adverse selection in the individual market and benefit small group households without raising taxpayer costs.

Keywords: health insurance; market segmentation (search for similar items in EconPapers)
JEL-codes: I11 I13 I18 L00 (search for similar items in EconPapers)
Date: 2021-10
New Economics Papers: this item is included in nep-com and nep-hea
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Persistent link: https://EconPapers.repec.org/RePEc:pri:econom:2021-93

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