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Can Automatic Retention Improve Health Insurance Market Outcomes?

Author

Listed:
  • Adrianna L. McIntyre
  • Mark Shepard
  • Myles Wagner

Abstract

There is growing interest in market design using default rules and other choice architecture principles to steer consumers toward desirable outcomes. Using data from Massachusetts’ health insurance exchange, we study an "automatic retention" policy intended to prevent coverage interruptions among low-income enrollees. Rather than disenroll people who lapse in paying premiums, the policy automatically switches them to an available free plan until they actively cancel or lose eligibility. We find that automatic retention has a sizable impact, switching 14% of consumers annually and differentially retaining healthy, low-cost individuals. The results illustrate the power of defaults to shape insurance coverage outcomes.

Suggested Citation

  • Adrianna L. McIntyre & Mark Shepard & Myles Wagner, 2021. "Can Automatic Retention Improve Health Insurance Market Outcomes?," NBER Working Papers 28630, National Bureau of Economic Research, Inc.
    • Handle: RePEc:nbr:nberwo:28630
    Note: EH PE
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    Cited by:

    1. Drake, Coleman & Anderson, David & Cai, Sih-Ting & Sacks, Daniel W., 2023. "Financial transaction costs reduce benefit take-up evidence from zero-premium health insurance plans in Colorado," Journal of Health Economics, Elsevier, vol. 89(C).
    2. Keith Marzilli Ericson & Timothy J. Layton & Adrianna McIntyre & Adam Sacarny, 2023. "Reducing Administrative Barriers Increases Take-up of Subsidized Health Insurance Coverage: Evidence from a Field Experiment," NBER Working Papers 30885, National Bureau of Economic Research, Inc.

    More about this item

    JEL classification:

    • D90 - Microeconomics - - Micro-Based Behavioral Economics - - - General
    • I13 - Health, Education, and Welfare - - Health - - - Health Insurance, Public and Private
    • I18 - Health, Education, and Welfare - - Health - - - Government Policy; Regulation; Public Health

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