Employer Incentives and Distortions in Health Insurance Design: Implications for Welfare and Costs

Nicholas Tilipman

American Economic Review, 2022, vol. 112, issue 3, 998-1037

Abstract: This paper studies employer incentives in designing health insurance provider networks and whether observed offerings reflect preferences that are aligned with employees. I estimate a model of supply and demand where I endogenize employer health plan offerings with respect to hospital and physician networks. I find that employers "overprovide" broad networks by overweighting the preferences of certain employees, specifically older workers and those in regions with less provider competition, over the preferences of the average employee household. Shifting employers toward offering different provider networks in different geographic markets could yield substantial gains to surplus, with minimal distributional or selection effects.

JEL-codes: G22 G28 I13 J32 M52 (search for similar items in EconPapers)
Date: 2022
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Citations: View citations in EconPapers (6)

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DOI: 10.1257/aer.20181917

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