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Remedies for Sick Insurance

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  • Daniel McFadden
  • Carlos Noton
  • Pau Olivella

Abstract

This expository paper describes the factors that contribute to failure of health insurance markets, and the regulatory mechanisms that have been and can be used to combat these failures. Standardized contracts and creditable coverage mandates are discussed, along with premium support, enrollment mandates, guaranteed issue, and risk adjustment, as remedies for selection-related market damage. An overall conclusion of the paper is that the design and management of creditable coverage mandates are likely to be key determinants of the performance of the health insurance exchanges that are a core provision of the PPACA of 2010. Enrollment mandates, premium subsidies, and risk adjustment can improve the stability and relative efficiency of the exchanges, but with carefully designed creditable coverage mandates are not necessarily critical for their operation.

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Paper provided by Barcelona Graduate School of Economics in its series Working Papers with number 620.

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Date of creation: Mar 2012
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Handle: RePEc:bge:wpaper:620
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Keywords: health insurance; adverse selection; health care reform; creditable coverage;

Other versions of this item:

Find related papers by JEL classification:
  • D4 - Microeconomics - - Market Structure, Pricing, and Design
  • D62 - Microeconomics - - Welfare Economics - - - Externalities
  • 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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Cited by:

  1. Daniel McFadden & Carlos Noton & Pau Olivella, 2013. "Minimum Coverage Regulation in Insurance Markets," Documentos de Trabajo 301, Centro de Economía Aplicada, Universidad de Chile.
  2. Filipova-Neumann, Lilia & Hoy, Michael, 2014. "Managing genetic tests, surveillance, and preventive medicine under a public health insurance system," Journal of Health Economics, Elsevier, vol. 34(C), pages 31-41.

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