Restrictive Rating and Adverse Selection in Health Insurance

Patricia H. Born and E. Tice Sirmans

Journal of Risk & Insurance, 2020, vol. 87, issue 4, 919-933

Abstract: Recent healthcare reform in the United States, including rating restrictions, imposed substantial changes to health insurer operations. We provide evidence of the presence of adverse selection following the enactment of the Patient Protection and Affordable Care Act of 2010. Using a unique dataset consisting of information on health insurance plans from multiple health insurers, across states for the years 2013–2017, we document a statistically significant correlation between coverage and risk, indicating the presence of adverse selection, that varies over time in both the individual and group markets for health insurance.

Date: 2020
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