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Title: Regulatory Redistribution in the Market for Health Insurance

Citation Type: Journal Article

Publication Year: 2015

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Abstract: Community-rating regulations equalize the insurance premiums faced by the healthy and the unhealthy. Intended reductions in the unhealthys premiums can be undone, however, if the healthy forgo coverage. The severity of this adverse selection problem hinges largely on how health care costs are distributed across market participants. Theoretically, I show that Medicaid expansions can combat adverse selection by removing high cost individuals from the relevant risk pool. Empirically, I find that private coverage rates improved significantly in community-rated markets when states expanded Medicaids coverage of relatively unhealthy adults. The effects of these health policy instruments are fundamentally linked.

Url: http://pubs.aeaweb.org/doi/pdfplus/10.1257/app.20130169

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Authors: Clemens, Jeffrey

Periodical (Full): American Economic Journal

Issue: 7

Volume: 2

Pages: 109-134

Data Collections: IPUMS CPS

Topics: Health

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