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Title: Do Ordeals Work for Selection Markets? Evidence from Health Insurance Auto-Enrollment

Citation Type: Miscellaneous

Publication Year: 2023

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Abstract: Are application hassles, or "ordeals," an effective way to limit public program enrollment? We provide new evidence by studying (removal of) an auto-enrollment policy for health insurance, adding an extra step to enroll. This minor ordeal has a major impact, reducing enrollment by 33% and differentially excluding young, healthy, and economically disadvantaged people. Using a simple model, we show that adverse selection-a classic feature of insurance markets-undermines ordeals' standard rationale of excluding low-value individuals, since they are also low-cost and may not be inefficient. Our analysis illustrates why ordeals targeting is unlikely to work well in selection markets.

Url: https://mylesnwagner.github.io/files/ShepardWagner_OrdealsHealthInsurance_08_23.pdf

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Authors: Shepard, Mark; Wagner, Myles

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Data Collections: IPUMS USA

Topics: Health, Labor Force and Occupational Structure

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