Market Design in Regulated Health Insurance Markets: Risk Adjustment vs. Subsidies

Liran Einav, Amy Finkelstein and Pietro Tebaldi

No 32586, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: Health insurance is increasingly provided through managed competition, in which subsidies for consumers and risk adjustment for insurers are key market design instruments. We illustrate theoretically that, in markets with adverse selection, subsidies provide greater flexibility in tailoring premiums to heterogeneous buyers, and produce equilibria with lower markups and greater enrollment. We assess these effects quantitatively using estimates from the California ACA marketplace.

JEL-codes: G22 G28 H51 I13 (search for similar items in EconPapers)
Date: 2024-06
New Economics Papers: this item is included in nep-com, nep-des, nep-hea, nep-reg and nep-rmg
Note: EH IO PE
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