When Should There Be Vertical Choice in Health Insurance Markets?

• 成果类型: Article
• 署名作者: Marone, Victoria R.; Sabety, Adrienne
• 署名单位: University of Texas System; University of Texas Austin; National Bureau of Economic Research; University of Notre Dame
• 刊物名称: AMERICAN ECONOMIC REVIEW
• ISSN/ISSBN: 0002-8282
• DOI: 10.1257/aer.20201073
• 发表日期: 2022
• 页码: 304-342
• 关键词: Moral hazard; demand heterogeneity; adverse selection; Welfare economics; medical-care; plan choice; COMPETITION; INFORMATION; inconsistencies; uncertainty

摘要

We study the welfare effects of offering choice over coverage levels-vertical choice-in regulated health insurance markets. We emphasize that heterogeneity in efficient coverage level is not sufficient to motivate choice. When premiums cannot reflect individuals' costs, it may not be in consumers'best interest to select their efficient coverage level. We show that vertical choice is efficient only if consumers with higher willingness to pay have a higher efficient level of coverage. We investigate this condition empirically and find that as long as a minimum coverage level can be enforced, the welfare gains from vertical choice are either zero or economically small.