Regulatory Redistribution in the Market for Health Insurance

Jeffrey Clemens

No 11-011, Discussion Papers from Stanford Institute for Economic Policy Research

Abstract: In the early 1990s, several US states enacted community rating regulations to equalize the private health insurance premiums paid by the healthy and the sick. Consistent with severe adverse selection pressures, their private coverage rates fell by 8-11 percentage points more than rates in comparable markets over subsequent years. By the early 2000s, however, most of these losses had been recovered. The recoveries were coincident with substantial public insurance expansions (for unhealthy adults, pregnant women, and children) and were largest in the markets where public coverage of unhealthy adults expanded most. The analysis highlights an important linkage between the incidence of public insurance programs and redistributive regulations. When targeted at the sick, public insurance expansions can relieve the distortions associated with premium regulations, potentially crowding in private coverage. Such expansions will look particularly attractive to participants in community-rated insurance markets when a federal government shares in the cost of local public insurance programs.

Keywords: Community Rating; Medicaid; Health Insurance; Social Insurance; Redistribution; Fiscal Competition (search for similar items in EconPapers)
JEL-codes: H11 H51 H53 I11 I18 I38 (search for similar items in EconPapers)
Date: 2012-04
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Citations: View citations in EconPapers (8)

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Related works:
Journal Article: Regulatory Redistribution in the Market for Health Insurance (2015)
Working Paper: Regulatory Redistribution in the Market for Health Insurance (2014)
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Persistent link: https://EconPapers.repec.org/RePEc:sip:dpaper:11-011

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