The Two-Margin Problem in Insurance Markets

• 成果类型: Article
• 署名作者: Geruso, Michael; Layton, Timothy J. J.; McCormack, Grace; Shepard, Mark
• 署名单位: University of Texas System; University of Texas Austin; Harvard University; National Bureau of Economic Research
• 刊物名称: REVIEW OF ECONOMICS AND STATISTICS
• ISSN/ISSBN: 0034-6535
• DOI: 10.1162/rest_a_01070
• 发表日期: 2023-03
• 页码: 237-257
• 关键词: health-insurance; adverse selection; information frictions; risk adjustment; plan choice; COMPETITION; DESIGN; welfare

摘要

Insurance markets often feature consumer sorting along both an extensive margin (whether to buy) and an intensive margin (which plan to buy). We present a new graphical theoretical framework that extends a workhorse model to incorporate both selection margins simultaneously. A key insight from our framework is that policies aimed at addressing one margin of selection often involve an economically meaningful trade-off on the other margin in terms of prices, enrollment, and welfare. Using data from Massachusetts, we illustrate these trade-offs in an empirical sufficient statistics approach that is tightly linked to the graphical framework we develop.