Quality disclosure and the timing of insurers’ adjustments: Evidence from medicare advantage
Journal of Health Economics, 2018, vol. 61, issue C, 13-26
Mandatory quality disclosure often includes a period over which the quality of new entrants is unreported. This provides the opportunity for forward-looking firms to adjust product characteristics in advance of disclosure. Using comprehensive data on Medicare Advantage (MA) from 2007 to 2015, I exploit the design of the MA Star Rating program to examine the presence of forward-looking behavior among insurers. I find that high-quality insurers reduce prices leading up to quality disclosure, while low-quality insurers increase prices in advance of quality disclosure. These dynamics are consistent with firms anticipating a future change in consumer inertia and updating current-period prices accordingly.
Keywords: Quality disclosure; Health insurance; Medicare Advantage (search for similar items in EconPapers)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:jhecon:v:61:y:2018:i:c:p:13-26
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Journal of Health Economics is currently edited by J. P. Newhouse, A. J. Culyer, R. Frank, K. Claxton and T. McGuire
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