Regulating Markups in US Health Insurance

• 成果类型: Article
• 署名作者: Cicala, Steve; Lieber, Ethan M. J.; Marone, Victoria
• 署名单位: University of Chicago; University of Notre Dame; Northwestern University
• 刊物名称: AMERICAN ECONOMIC JOURNAL-APPLIED ECONOMICS
• ISSN/ISSBN: 1945-7782
• DOI: 10.1257/app.20180011
• 发表日期: 2019
• 页码: 71-104
• 关键词: medical loss ratio; financial performance; care; insurer; procurement; OWNERSHIP; MARKETS; welfare

摘要

A health insurer's Medical Loss Ratio (MLR) is the share of premiums spent on medical claims, or the inverse markup over average claims cost. The Affordable Care Act introduced minimum MLR provisions for all health insurance sold in fully insured commercial markets, thereby capping insurer profit margins, but not levels. While intended to reduce premiums, we show this rule creates incentives to increase costs. Using variation created by the rule's introduction as a natural experiment, we find medical claims rose nearly one-for-one with distance below the regulatory threshold: 7 percent in the individual market and 2 percent in the group market. Premiums were unaffected.