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Pricing regulations in individual health insurance: Evidence from Medigap

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  • Curto, Vilsa E.

Abstract

I compare two pricing regulations that protect those with health conditions—“community rating,” which requires insurers to charge uniform premiums, and “guaranteed renewal,” which requires insurers to increase future premiums uniformly. Using individual-level Medigap data from 2006–2010, I compare individuals within 25 miles of borders between 3 community rating and 6 guaranteed renewal states. Relative to guaranteed renewal, community rating (with guaranteed issue) leads to a decrease in Medigap enrollment of 9.70 pp (29.7%), or 26.8–33.7% for low-spending conditions (diabetes, heart disease) and 21.9–29.9% for high-spending conditions (cancer, kidney disease); an increase in annual Medigap premiums of $276 (10.1%); a decrease in the likelihood of an earlier purchase of 7.99 pp (50.3%); and an increase in purchase delay of 1.08 years (17.0%).

Suggested Citation

  • Curto, Vilsa E., 2023. "Pricing regulations in individual health insurance: Evidence from Medigap," Journal of Health Economics, Elsevier, vol. 91(C).
    • Handle: RePEc:eee:jhecon:v:91:y:2023:i:c:s0167629623000620
    DOI: 10.1016/j.jhealeco.2023.102785
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    References listed on IDEAS

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    1. Jeffrey Clemens, 2015. "Regulatory Redistribution in the Market for Health Insurance," American Economic Journal: Applied Economics, American Economic Association, vol. 7(2), pages 109-134, April.
    2. Sonia Jaffe & Mark Shepard, 2020. "Price-Linked Subsidies and Imperfect Competition in Health Insurance," American Economic Journal: Economic Policy, American Economic Association, vol. 12(3), pages 279-311, August.
    3. Hendrik Schmitz & Nicolas R. Ziebarth, 2017. "Does Price Framing Affect the Consumer Price Sensitivity of Health Plan Choice?," Journal of Human Resources, University of Wisconsin Press, vol. 52(1), pages 88-127.
    4. Aditi P. Sen & Thomas DeLeire, 2018. "How does expansion of public health insurance affect risk pools and premiums in the market for private health insurance? Evidence from Medicaid and the Affordable Care Act Marketplaces," Health Economics, John Wiley & Sons, Ltd., vol. 27(12), pages 1877-1903, December.
    5. Marika Cabral & Neale Mahoney, 2019. "Externalities and Taxation of Supplemental Insurance: A Study of Medicare and Medigap," American Economic Journal: Applied Economics, American Economic Association, vol. 11(2), pages 37-73, April.
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    Keywords

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    JEL classification:

    • I11 - Health, Education, and Welfare - - Health - - - Analysis of Health Care Markets
    • 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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