Becker Friedman Institute
for Research in Economics
The University of Chicago

Research. Insights. Impact. Advancing the Legacy of Chicago Economics.

I18: Health: Government Policy; Regulation; Public Health

Estimating Equilibrium in Health Insurance Exchanges: Price Competition and Subsidy Design under the ACA

Pietro Tebaldi

To design premium subsidies in a health insurance market it is necessary to estimate consumer demand, cost, and study how different subsidy schemes affect insurer's incentives. I combine data on household-level enrollment and plan-level claims from the California Affordable Care Act insurance exchange with a model of insurance demand and insurers' competition to assess equilibrium outcomes under alternative subsidy designs. I estimate that younger households are significantly more price sensitive and cheaper to cover.

Regulated Age-based Pricing in Subsidized Health Insurance: Evidence from the Affordable Care Act

Pietro Tebaldi, Joe Orsini

We study age-rating restrictions in the health insurance marketplaces introduced by the Affordable Care Act. Although age-rating restrictions affect pre-subsidy premiums, participation is primarily driven by subsidy generosity rather than pricing decisions because most buyers are subsidized. By combining pre- and post-reform data on prices and enrollment, we find that age-rating restrictions alter pre-subsidy premiums, with an increase of $230 per year for buyers under 50 years old and a decrease of $900 per year for buyers over 50.

Infant Mortality and the Repeal of Federal Prohibition

David S. Jacks, Krishna Pendakur, Hitoshi Shigeoka

Exploiting a newly constructed dataset on county-level variation in prohibition status from 1933 to 1939, this paper asks two questions: what were the effects of the repeal of federal prohibition on infant mortality? And were there any significant externalities from the individual policy choices of counties and states on their neighbors? We find that dry counties with at least one wet neighbor saw baseline infant mortality increase by roughly 3% while wet counties themselves saw baseline infant mortality increase by roughly 2%.

Was the First Public Health Campaign Successful? The Tuberculosis Movement and Its Effect on Mortality

D. Mark Anderson, Kerwin Charles, Claudio Las Heras Olivares, Daniel I. Rees

The U.S. tuberculosis movement pioneered many of the strategies of modern public health campaigns. Dedicated to eradicating a specific disease, it was spearheaded by voluntary associations and supported by the sale of Christmas Seals. Although remarkable in its scope and intensity, the effectiveness of the

Sharing R&D Risk in Healthcare via FDA Hedges

Adam Jørring, Andrew W. Lo, Tomas Philipson, Manita Singh, Richard Thakor

The high cost of capital for firms conducting medical research and development (R&D) has been partly attributed to the government risk facing investors in medical innovation. This risk slows down medical innovation because investors must be compensated for it. We propose new and simple financial instruments, Food and Drug Administration (FDA) hedges, to allow medical R&D investors to better share the pipeline risk associated with FDA approval with broader capital markets.

Work Incentives of Medicaid Beneficiaries and the Role of Asset Testing

Svetlana Pashchenko, Ponpoje Porapakkarm

Should asset testing be used in means-tested programs? These programs target low-income people, but low income can result not only from low productivity but also from low labor supply. We aim to show that in the asymmetric information environment, there is a positive role for asset testing. We focus on Medicaid, one of the largest means-tested programs in the US, and we ask two questions: 1) Does Medicaid distort work incentives? 2) Can asset testing improve the insurance-incentives trade-off of Medicaid?

The Upside-down Economics of Regulated and Otherwise Rigid Prices

Casey Mulligan, Kevin Tsui

A version of the Becker-Lancaster characteristics model featuring quality-quantity tradeoffs reveals a number of surprising market behaviors that can result from price regulations that are imposed on competitive markets for products that have adjustable non-price attributes.  Quality need not clear a competitive market in the same way that prices do, because quality can reduce the willingness to pay for quantity. Producers can benefit from price ceilings, at the expense of consumers.

2SLS vs 2SRI: Appropriate Methods For Rare Outcomes And/Or Rare Exposures

Anirban Basu, Norma Coe

Using Monte-Carlo simulations, we compare the two-stage least-squares (2SLS) estimator with twostage residual inclusion (2SRI) estimators, with varying forms of residuals, to estimate the local average treatment effect parameter for a binary outcome and endogenous binary treatment model in the presence of binary covariates and a binary instrumental variable. We vary the rarity of either/both the outcome and the treatment and find different estimators to produce the least bias in different settings.

Caught in the Bulimic Trap? Persistence and State Dependence of Bulimia Among Young Women

John Ham, Daniela Iorio, Michelle Sovinsky Goeree

Eating disorders are an important and growing health concern, and bulimia nervosa (BN) accounts for the largest fraction of eating disorders. Health consequences of BN are substantial and especially serious given the increasingly compulsive nature of the disorder. However, remarkably little is known about the mechanisms underlying the persistent nature of BN. We use data from a unique panel data set, the National Heart, Lung, and Blood Institute Growth and Health Study, which was conducted for ten years on young women aged 9-10 at the start of the survey (in 1987).