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.
I13: Health Insurance, Public and Private
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.
We analyze the financial value of insurance when individuals have access to credit markets. Loans allow consumers to smooth shocks across time, decreasing the value of the smoothing (across states of the world) provided by insurance. We derive a simple formula for the incremental value of insurance and show how it depends on individual characteristics and the features of available loans. Our central contribution is to derive formulas for aggregate welfare that can be taken to data from typical studies of health insurance.
We analyze the evolution of health insurer costs in Massachusetts between 2010-2012, paying particular attention to changes in the composition of enrollees. This was a period in which Health Maintenance Organizations (HMOs) increasingly used physician cost control incentives but Preferred Provider Organizations (PPOs) did not. We show that cost growth and its components cannot be understood without accounting for (i) consumers’ switching between plans, and (ii) differences in cost characteristics between new entrants and those leaving the market.
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?
Traditional value of medical innovation models estimate the beneﬁts of a new treatment to individuals who fall sick ex-post. However, economic theory suggests medical innovation has additional beneﬁts ex-ante - before susceptible individuals know whether or not they will fall sick.
We examine some economic consequences of hospitalizations using an event study approach in which we link about one million individuals with a (non-pregnancy related) hospital admission to a 10-year panel of their consumer credit reports. For prime-age adults with health insurance, we find that hospital admissions increase unpaid medical bills, reduce access to credit, reduce borrowing, and increase bankruptcy rates.
This paper examines the long-term impacts on health and healthy behaviors of two of the oldest and most widely cited U.S. early childhood interventions evaluated by the method of randomization with long-term follow-up: the Perry Preschool Project (PPP) and the Carolina Abecedarian Project (ABC). There are pronounced gender effects strongly favoring boys, although there are also effects for girls. Dynamic mediation analyses show a significant role played by improved childhood traits, above and beyond the effects of experimentally enhanced adult socioeconomic status.