Can Automatic Retention Improve Health Insurance Market Outcomes?

Adrianna McIntyre, Mark Shepard and Myles Wagner

AEA Papers and Proceedings, 2021, vol. 111, 560-66

Abstract: There is growing interest in market design using default rules and other "choice architecture" principles to steer consumers toward desirable outcomes. Using data from Massachusetts's health insurance exchange, we study an "automatic retention" policy intended to prevent coverage interruptions among low-income enrollees. Rather than disenroll people who lapse in paying premiums, the policy automatically switches them to an available free plan until they actively cancel or lose eligibility. We find that automatic retention has a sizable impact, switching 14 percent of consumers annually and differentially retaining healthy, low-cost individuals. The results illustrate the power of defaults to shape insurance coverage outcomes.

JEL-codes: G22 H75 I13 (search for similar items in EconPapers)
Date: 2021
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DOI: 10.1257/pandp.20211083

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