Who Benefits from Medicare Advantage

The Affordable Care Act calls for significant cuts in reimbursements to insurers providing Medicare Advantage (MA) coverage, which has been the most popular alternative to traditional fee-for-service Medicare. Opponents of these cuts argue that they carry serious negative repercussions for seniors, and have lobbied successfully to force their postponement. But research coming out of the Wharton School suggests that cuts to MA reimbursements actually are unlikely to harm consumer welfare.https://repository.upenn.edu/pennwhartonppi/1019/thumbnail.jp

Designing Health Insurance Exchanges: Key Decisions

A cornerstone of health care reform is the establishment of state-level insurance exchanges where individuals and small businesses can purchase health insurance in an online marketplace. This report reviews the experience of Massachusetts in developing a health insurance exchange and offers policymakers guidance on key features and likely consumer responses

Inferring risk perceptions and preferences using choice from insurance menus: theory and evidence

Demand for insurance can be driven by high risk aversion or high risk. We show how to separately identify risk preferences and risk types using only choices from menus of insurance plans. Our revealed preference approach does not rely on rational expectations, nor does it require access to claims data. We show what can be learned non-parametrically from variation in insurance plans, offered separately to random cross-sections or offered as part of the same menu to one cross-section. We prove that our approach allows for full identification in the textbook model with binary risks and extend our results to continuous risks. We illustrate our approach using the Massachusetts Health Insurance Exchange, where choices provide informative bounds on the type distributions, especially for risks, but do not allow us to reject homogeneity in preferences

Optimizing Outcomes on the Health Insurance Exchanges

The success of the new health insurance exchanges will depend greatly on the quality of the enrollment decisions that consumers make. Choosing the wrong insurance product can translate into billions of dollars in wasteful spending at the national level. Faculty at the University of Pennsylvania have contributed to several studies outlining important ways that the exchanges can be made to work better for consumers—and for the larger economy.https://repository.upenn.edu/pennwhartonppi/1013/thumbnail.jp

Replication data for: Pricing Regulation and Imperfect Competition on the Massachusetts Health Insurance Exchange

Ericson, Keith M. Marzilli, and Starc, Amanda, (2015) "Pricing Regulation and Imperfect Competition on the Massachusetts Health Insurance Exchange." Review of Economics and Statistics 97:3, 667-682

Designing and Regulating Health Insurance Exchanges: Lessons from Massachusetts

The Massachusetts health care reform provides preliminary evidence on the function of health insurance exchanges and individual insurance markets. This paper describes the type of products consumers choose and the dynamics of consumer choice. Evidence shows that choice architecture, including product standardization and the use of heuristics (rules of thumb), affects choice. In addition, while consumers often choose less generous plans in the exchange than in traditional employer-sponsored insurance, there is considerable heterogeneity in consumer demand, as well as some evidence of adverse selection. We examine the role of imperfect competition between insurers, and document the impact of pricing and product regulation on the level and distribution of premiums. Given our extensive choice data, we synthesize the evidence of the Massachusetts exchange to inform the design and regulation on other exchanges