Data and Code for: Price-Linked Subsidies and Imperfect Competition in Health Insurance
- Shepard, Mark (Harvard University. Kennedy School of Government.)
- Jaffe, Sonia (Microsoft)
- Harvard University
United States Department of Health and Human Services. National Institutes of Health. National Institute on Aging
- Award Number: T32-AG000186
National Science Foundation
- Award Number: Graduate Research Fellowship
AbstractPolicymakers 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 post-subsidy 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%, and much morein less competitive markets. For cost uncertainty reasonable in a mature market, these losses outweigh the benefits of price-linking.
2007-01-01 / 2011-12-31Time Period: Mon Jan 01 00:00:00 EST 2007--Sat Dec 31 00:00:00 EST 2011
Is version of
Jaffe, Sonia, and Mark Shepard. “Price-Linked Subsidies and Imperfect Competition in Health Insurance.” American Economic Journal: Economic Policy, n.d.
Update Metadata: 2020-07-23 | Issue Number: 1 | Registration Date: 2020-07-23