TY - JOUR
T1 - Incumbent regulation and adverse selection
T2 - You can keep your health plan, but at what cost?
AU - Fleitas, Sebastian
AU - Gowrisankaran, Gautam
AU - Lo Sasso, Anthony
N1 - Funding Information:
We thank seminar participants for helpful comments and acknowledge funding from the Agency for Healthcare Policy and Research (Grant 1R01HS024850-01). The insurance company which we consider in this study provided us with the study data but has not provided us with financial support or edited or influenced the direction or conclusions of our research.
Publisher Copyright:
© 2021 Elsevier B.V.
PY - 2022/1
Y1 - 2022/1
N2 - The 2010 Affordable Care Act (ACA) instituted incumbent regulation policies in the small group market, where existing health plans could choose to defer compliance with ACA regulations. This created incentives for employers with lower expected healthcare costs and greater uncertainty to not immediately become ACA compliant. We use unique national data with over 300,000 employer-years from 2013 to 2017. Consistent with these incentives, we find that employers with healthier enrollees and those with more turnover were more likely to not immediately comply. This created adverse selection in the ACA-compliant market, increasing its annual healthcare costs by $365 per individual in 2014.
AB - The 2010 Affordable Care Act (ACA) instituted incumbent regulation policies in the small group market, where existing health plans could choose to defer compliance with ACA regulations. This created incentives for employers with lower expected healthcare costs and greater uncertainty to not immediately become ACA compliant. We use unique national data with over 300,000 employer-years from 2013 to 2017. Consistent with these incentives, we find that employers with healthier enrollees and those with more turnover were more likely to not immediately comply. This created adverse selection in the ACA-compliant market, increasing its annual healthcare costs by $365 per individual in 2014.
KW - Community rating
KW - Health insurance
KW - Small group market
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U2 - 10.1016/j.jpubeco.2021.104556
DO - 10.1016/j.jpubeco.2021.104556
M3 - Article
AN - SCOPUS:85120972601
VL - 205
JO - Journal of Public Economics
JF - Journal of Public Economics
SN - 0047-2727
M1 - 104556
ER -