Do Larger Health Insurance Subsidies Benefit Patients or Producers? Evidence from Medicare Advantage

Cabral, Marika; Geruso, Michael; Mahoney, Neale

doi:10.1257/aer.20151362

Cited by 71 publications

(46 citation statements)

References 40 publications

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“…The efficient outcome is at point c, full enrollment, because in this example the demand curve is everywhere above the marginal cost curve, implying that willingness-to-pay exceeds individualspecific marginal costs to the plan for every individual. 4 Here, society as a whole (consumers + insurers) would be made better off if all consumers took up insurance.…”

Section: Subsidies and Penalties Related To Taking Up Health Insurancementioning

confidence: 99%

Selection in Health Insurance Markets and Its Policy Remedies

Geruso

Layton

2017

Journal of Economic Perspectives

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Selection (adverse or advantageous) is the central problem that inhibits the smooth, efficient functioning of competitive health insurance markets. Even-and perhaps especially-when consumers are well-informed decision makers and insurance markets are highly competitive and offer choice, such markets may function inefficiently due to risk selection. Selection can cause markets to unravel with skyrocketing premiums and can cause consumers to be under-or overinsured. In its simplest form, adverse selection arises due to the tendency of those who expect to incur high health care costs in the future to be the most motivated purchasers. The costlier enrollees are more likely to become insured rather than to remain uninsured, and conditional on having health insurance, the costlier enrollees sort themselves to the more generous plans in the choice set. These dual problems represent the primary concerns for policymakers designing regulations for health insurance markets.In practice, identifying selection problems and designing policy responses is not always straightforward. A natural starting point for uncovering selection distortions is a comparison of the chronic health conditions of consumers who elect more-versus less-generous insurance. However, selection can play out in complex ways that extend beyond issues of who remains uninsured and who chooses which plan.

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Section: Subsidies and Penalties Related To Taking Up Health Insurancementioning

confidence: 99%

Selection in Health Insurance Markets and Its Policy Remedies

Geruso

Layton

2017

Journal of Economic Perspectives

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“…Previous research has demonstrated that the county benchmark payment rates used to determine capitated payment amounts for all MA plans, including D‐SNPs, have important effects on the market for regular MA plans. Larger benchmarks have been found to increase the availability of regular plans, insurer entry into MA markets, the generosity of benefits offered, regular MA enrollment, and insurer profits …”

Section: Conceptual Frameworkmentioning

confidence: 99%

The effects of plan payment rates on the market for Medicare Advantage Dual‐Eligible Special Needs Plans

McGarry

Layton

Grabowski

2019

Health Services Research

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Objective To determine the effect of higher potential benchmark payment rates on the market for Medicare Advantage (MA) Dual‐Eligible Special Needs Plans (D‐SNPs). Data Sources/Study Setting Publicly available county‐level data from 2009 to 2015 regarding the number of D‐SNPs operating within the county, the enrollment in and five‐star quality of score of these plans, and the benchmark amounts used to determine capitated plan payments. Study Design This study exploits the introduction of quality bonus payments to the MA program in 2012, and exogenous geographic variation in the potential size of these bonuses to estimate the effect of benchmark payment increases on the availability, quality, and take‐up of D‐SNPs. We use a difference‐in‐difference estimation approach to compare changes in the market for D‐SNPs in counties eligible for a double bonus to those that are not. Principal Findings The doubling of bonuses was associated with a relative 29 percent increase in the number of D‐SNPs offered (P = 0.021) and 0.1‐star increase in the average quality of available D‐SNPs (P = 0.034). No relative increase in overall D‐SNP enrollment was detected. Conclusions These findings indicate that larger benchmark payment amounts may influence insurers’ decisions of whether to participate in the D‐SNP market but not dual‐eligibles' decision of whether to enroll in these plans. Future research is needed to inform discussions about whether D‐SNPs are a viable mechanism for integrating benefits for dual eligibles and the degree to which Medicare policies should support their continued growth.

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“…In a 2018 study, Pelech examines pre‐ACA policy changes impacting private fee‐for‐service (PFFS) plans, finding that reductions in county‐level plan offerings led to an increase in expected enrollee out‐of‐pocket spending and higher premiums for PFFS plans . A 2014 study by Cabral et al exploits the introduction of MA payment floors in 2000, finding that, among plans receiving higher payments, greater market share was associated with lower “pass through” of those payments to enrollees in the form of reduced premiums . McCarthy and Darden's 2017 study examines the impact of MA quality ratings on premiums and plan offerings for 2009‐10, finding that contracts receiving higher star ratings raised their premiums in the subsequent year .…”

Section: Relevant Literaturementioning

confidence: 99%

Competition and health plan quality in the Medicare Advantage market

Adrion

2019

Health Services Research

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Objective To examine the relationship between insurer market structure, health plan quality, and health insurance premiums in the Medicare Advantage (MA) program. Data Sources/Study Setting Administrative data files from the Centers for Medicare and Medicaid Services, along with other secondary data sources. Study Design Trends in MA market concentration from 2008 to 2017 are presented, alongside logistic and linear regression models examining MA plan quality and premiums as a function of insurer market structure for 2011. Data Collection/Extraction Methods Data are publicly available. Principal Findings MA plans that tend to operate in more concentrated MA markets have a higher predicted probability of receiving a high‐quality health plan rating. Operating in more concentrated MA markets was also found to be associated with higher premiums. Among plans that tend to operate in very concentrated MA markets, high‐quality MA plans were associated with premiums as much as two times higher than premiums associated with lower‐quality plans. Conclusions Any policies directed at enhancing insurer competition should consider implications for health plan quality, which may be very different than the implications for enrollee premiums.

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Do Larger Health Insurance Subsidies Benefit Patients or Producers? Evidence from Medicare Advantage

Cited by 71 publications

References 40 publications

Selection in Health Insurance Markets and Its Policy Remedies

Selection in Health Insurance Markets and Its Policy Remedies

The effects of plan payment rates on the market for Medicare Advantage Dual‐Eligible Special Needs Plans

Competition and health plan quality in the Medicare Advantage market

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