Price-Linked Subsidies and Imperfect Competition in Health Insurance

• 成果类型: Article
• 署名作者: Jaffe, Sonia; Shepard, Mark
• 署名单位: Microsoft; Harvard University; National Bureau of Economic Research
• 刊物名称: AMERICAN ECONOMIC JOURNAL-ECONOMIC POLICY
• ISSN/ISSBN: 1945-7731
• DOI: 10.1257/pol.20180198
• 发表日期: 2020
• 页码: 279-311
• 关键词: medicare part d; adverse selection; inertia; CHOICE

摘要

Policymakers subsidizing health insurance often face uncertainty about future market prices. We study the implications of one policy response: linking subsidies to prices to target a given postsubsidy premium. We show that these price-linked subsidies weaken competition, raising prices for the government and/or consumers. However, price-linking also ties subsidies to health care cost shocks, which may be desirable. Evaluating this tradeoff empirically, using a model estimated with Massachusetts insurance exchange data, we find that price-linking increases prices 1-6 percent, and much more in less competitive markets. For cost uncertainty reasonable in a mature market, these losses outweigh the benefits of price-linking.