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Restrictive Rating and Adverse Selection in Health Insurance

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  • Patricia H. Born
  • E. Tice Sirmans

Abstract

Recent healthcare reform in the United States, including rating restrictions, imposed substantial changes to health insurer operations. We provide evidence of the presence of adverse selection following the enactment of the Patient Protection and Affordable Care Act of 2010. Using a unique dataset consisting of information on health insurance plans from multiple health insurers, across states for the years 2013–2017, we document a statistically significant correlation between coverage and risk, indicating the presence of adverse selection, that varies over time in both the individual and group markets for health insurance.

Suggested Citation

  • Patricia H. Born & E. Tice Sirmans, 2020. "Restrictive Rating and Adverse Selection in Health Insurance," Journal of Risk & Insurance, The American Risk and Insurance Association, vol. 87(4), pages 919-933, December.
    • Handle: RePEc:bla:jrinsu:v:87:y:2020:i:4:p:919-933
    DOI: 10.1111/jori.12282
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    Cited by:

    1. Patricia H. Born & Evan M. Eastman & E. Tice Sirmans, 2023. "Managed care or carefully managed? Management of underwriting profitability by health insurers," The Geneva Papers on Risk and Insurance - Issues and Practice, Palgrave Macmillan;The Geneva Association, vol. 48(1), pages 5-31, January.
    2. Casper H. de Jong, 2021. "Risk classification and the balance of information in insurance; an alternative interpretation of the evidence," Risk Management and Insurance Review, American Risk and Insurance Association, vol. 24(4), pages 445-461, December.

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