Accounting-Based Regulation: Evidence from Health Insurers and the Affordable Care Act

• 成果类型: Article
• 署名作者: Eastman, Evan M.; Eckles, David L.; Van Buskirk, Andrew
• 署名单位: State University System of Florida; Florida State University; University System of Georgia; University of Georgia; University System of Ohio; Ohio State University
• 刊物名称: ACCOUNTING REVIEW
• ISSN/ISSBN: 0001-4826
• DOI: 10.2308/tar-2019-0173
• 发表日期: 2021
• 页码: 231-259
• 关键词: earnings management; IMPACT; coverage

摘要

The Patient Protection and Affordable Care Act (ACA) requires that insurers spend a minimum amount of their premium revenue on policyholder benefits. The Act specifies enforcement via a combination of insurer self-reporting, government examinations, and payment of policyholder rebates in cases where insurers fail to meet the required spending amount. We find that insurers' reported estimates are consistently overstated in situations in which more accurate estimates would have triggered rebate payments; publicly traded insurers (particularly those exhibiting poor financial reporting quality) exhibit the strongest evidence of strategic over-estimating. In aggregate, we estimate that approximately 14 percent of insurers engage in strategic over-estimates, and that insurer overestimates resulted in hundreds of millions of dollars in underpaid policyholder rebates. Our study illustrates how a combination of regulatory design choices and lax oversight can weaken the effectiveness of accounting-based regulation and have substantial economic consequences.