Insurers' Response to Selection Risk: Evidence from Medicare Enrollment Reforms

Francesco Decarolis and Andrea Guglielmo

No 22876, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: Evidence on insurers’ behavior in environments with both risk selection and market power is largely missing. We fill this gap by providing one of the first empirical accounts of how insurers adjust plan features when faced with potential changes in selection. Our strategy exploits a 2012 reform allowing Medicare enrollees to switch to 5-star contracts at anytime. This policy increased enrollment into 5-star contracts, but without risk selection worsening. Our findings show that this is due to 5-star plans lowering both premiums and generosity, thus becoming more appealing for most beneficiaries, but less so for those in worse health conditions.

JEL-codes: I1 I13 I18 L22 (search for similar items in EconPapers)
Date: 2016-12
New Economics Papers: this item is included in nep-ias
Note: EH IO PE
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Citations: View citations in EconPapers (1)

Published as Francesco Decarolis & Andrea Guglielmo, 2017. "Insurers’ response to selection risk: Evidence from Medicare enrollment reforms," Journal of Health Economics, vol 56, pages 383-396.

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Journal Article: Insurers’ response to selection risk: Evidence from Medicare enrollment reforms (2017)
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