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Mortality Effects and Choice Across Private Health Insurance Plans

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  • Jason Abaluck
  • Mauricio M. Caceres Bravo
  • Peter Hull
  • Amanda Starc

Abstract

Competition in health insurance markets may fail to improve health outcomes if consumers are not willing to pay for high quality plans. We document large differences in the mortality rates of Medicare Advantage (MA) plans within local markets. We then show that when high (low) mortality plans exit these markets, enrollees tend to switch to more typical plans and subsequently experience lower (higher) mortality. We develop a framework that uses this variation to estimate the relationship between observed mortality rates and causal mortality effects; we find a tight link. We then extend the framework to study other predictors of mortality effects and estimate consumer willingness to pay. Higher spending plans tend to reduce enrollee mortality, but existing quality ratings are uncorrelated with plan mortality effects. Consumers place little weight on mortality effects when choosing plans. Moving beneficiaries out of the bottom 5% of plans could save tens of thousands of elderly lives each year.

Suggested Citation

  • Jason Abaluck & Mauricio M. Caceres Bravo & Peter Hull & Amanda Starc, 2020. "Mortality Effects and Choice Across Private Health Insurance Plans," NBER Working Papers 27578, National Bureau of Economic Research, Inc.
  • Handle: RePEc:nbr:nberwo:27578
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    2. Joshua Angrist & Peter Hull & Parag A. Pathak & Christopher R. Walters, 2020. "Simple and Credible Value-Added Estimation Using Centralized School Assignment," NBER Working Papers 28241, National Bureau of Economic Research, Inc.
    3. Malani, Anup & Holtzman, Phoebe & Imai, Kosuke & Kinnan, Cynthia & Miller, Morgen & Swaminathan, Shailender & Voena, Alessandra & Woda, Bartosz & Conti, Gabriella, 2021. "Effect of Health Insurance in India: A Randomized Controlled Trial," IZA Discussion Papers 14913, Institute of Labor Economics (IZA).
    4. Martin Gaynor & Kate Ho & Robert J. Town, 2015. "The Industrial Organization of Health-Care Markets," Journal of Economic Literature, American Economic Association, vol. 53(2), pages 235-284, June.
    5. Rita Ginja & Julie Riise & Barton Willage & Alexander L.P. Willén, 2022. "Does Your Doctor Matter? Doctor Quality and Patient Outcomes," CESifo Working Paper Series 9788, CESifo.
    6. Ben Sprung-Keyser & Sonya Porter, 2023. "The Economic Geography of Lifecycle Human Capital Accumulation: The Competing Effects of Labor Markets and Childhood Environments," Working Papers 23-54, Center for Economic Studies, U.S. Census Bureau.
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    8. Michele Fioretti & Hongming Wang, 2020. "Performance Pay in Insurance Markets: Evidence from Medicare," Working Papers 2020.03, International Network for Economic Research - INFER.
    9. repec:hal:wpspec:info:hdl:2441/2ioennpq5m90holakkatq7cmms is not listed on IDEAS
    10. Leila Agha & Keith Marzilli Ericson & Kimberley H. Geissler & James B. Rebitzer, 2022. "Team Relationships and Performance: Evidence from Healthcare Referral Networks," Management Science, INFORMS, vol. 68(5), pages 3735-3754, May.
    11. Paul Goldsmith-Pinkham & Peter Hull & Michal Koles'ar, 2021. "Contamination Bias in Linear Regressions," Papers 2106.05024, arXiv.org, revised Feb 2024.
    12. Bär, Marlies & Bakx, Pieter & Wouterse, Bram & van Doorslaer, Eddy, 2022. "Estimating the health value added by nursing homes," Journal of Economic Behavior & Organization, Elsevier, vol. 203(C), pages 1-23.
    13. Holst, Laurens & Rademakers, Jany J.D.J.M. & Brabers, Anne E.M. & de Jong, Judith D., 2022. "Measuring health insurance literacy in the Netherlands – First results of the HILM-NL questionnaire," Health Policy, Elsevier, vol. 126(11), pages 1157-1162.
    14. Soonwoo Kwon, 2023. "Optimal Shrinkage Estimation of Fixed Effects in Linear Panel Data Models," Papers 2308.12485, arXiv.org, revised Oct 2023.
    15. Buitrago, Giancarlo & Rodríguez-Lesmes, Paul Andrés & Serna, Natalia & Vera-Hernández, Marcos, 2023. "The Role of Hospital Networks in Individual Mortality," Documentos de Trabajo 20945, Universidad del Rosario.
    16. Bar, M.; & Bakx, P.; & Wouterse, B.; & van Doorslaer, Eddy.;, 2022. "Estimating the health value added by nursing homes," Health, Econometrics and Data Group (HEDG) Working Papers 22/12, HEDG, c/o Department of Economics, University of York.
    17. Amitabh Chandra & Maurice Dalton & Douglas O. Staiger, 2023. "Are Hospital Quality Indicators Causal?," NBER Working Papers 31789, National Bureau of Economic Research, Inc.
    18. Michael Dinerstein & Isaac M. Opper, 2022. "Screening with Multitasking," CESifo Working Paper Series 9869, CESifo.
    19. Benjamin R. Handel & Jonathan T. Kolstad, 2021. "The Affordable Care Act After a Decade: Industrial Organization of the Insurance Exchanges," NBER Working Papers 29178, National Bureau of Economic Research, Inc.
    20. Son, Jinyeong, 2022. "Do mandated health insurance benefits for diabetes save lives?," Journal of Public Economics, Elsevier, vol. 216(C).
    21. Paul Goldsmith-Pinkham & Peter Hull & Michal Kolesár, 2021. "On Estimating Multiple Treatment Effects with Regression," Working Papers 2021-41, Princeton University. Economics Department..
    22. Amitabh Chandra & Evan Flack & Ziad Obermeyer, 2021. "The Health Costs of Cost-Sharing," NBER Working Papers 28439, National Bureau of Economic Research, Inc.

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    More about this item

    JEL classification:

    • C26 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Instrumental Variables (IV) Estimation
    • I11 - Health, Education, and Welfare - - Health - - - Analysis of Health Care Markets
    • J14 - Labor and Demographic Economics - - Demographic Economics - - - Economics of the Elderly; Economics of the Handicapped; Non-Labor Market Discrimination

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