Regulatory Redistribution in the Market for Health Insurance

Jeffrey Clemens

American Economic Journal: Applied Economics, 2015, vol. 7, issue 2, 109-34

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)

JEL-codes: G22 G28 H51 H53 I13 I18 I38 (search for similar items in EconPapers)
Date: 2015
Note: DOI: 10.1257/app.20130169
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Citations: View citations in EconPapers (14)

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Related works:
Working Paper: Regulatory Redistribution in the Market for Health Insurance (2014)
Working Paper: Regulatory Redistribution in the Market for Health Insurance (2012)
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