Paying for Health Insurance: The Trade-Off between Competition and Adverse Selection
We use data on health plan choices by employees of Harvard University to compare the benefits of insurance competition with the costs of adverse selection. Moving to a voucher-type system induced significant adverse selection, with a welfare loss of 2 to 4 percent of baseline spending. But increased...
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| Veröffentlicht in: | The Quarterly journal of economics 1998-05, Vol.113 (2), p.433-466 |
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| container_title | The Quarterly journal of economics |
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| creator | Cutler, David M. Reber, Sarah J. |
| description | We use data on health plan choices by employees of Harvard University to compare the benefits of insurance competition with the costs of adverse selection. Moving to a voucher-type system induced significant adverse selection, with a welfare loss of 2 to 4 percent of baseline spending. But increased competition reduced Harvard's premiums by 5 to 8 percent. The premium reductions came from insurer profits, so while Harvard was better off, the net effect for society was only the adverse selection loss. Adverse selection can be minimized by adjusting voucher amounts for individual risk. We discuss how such a system would work. |
| doi_str_mv | 10.1162/003355398555649 |
| format | Article |
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| identifier | ISSN: 0033-5533 |
| ispartof | The Quarterly journal of economics, 1998-05, Vol.113 (2), p.433-466 |
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| source | Business Source Complete; Periodicals Index Online; Jstor Complete Legacy; Oxford University Press Journals All Titles (1996-Current) |
| subjects | Adverse selection Analysis Claims adjustment Colleges & universities Competition Competition (Economics) Economic models Employer provided health insurance Finance Health care industry Health insurance Health maintenance organizations Insurance policies Insurance premiums Insurance providers Medical care, Cost of Preferred provider organizations Pricing policies Regression analysis Social insurance Studies Vouchers |
| title | Paying for Health Insurance: The Trade-Off between Competition and Adverse Selection |
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