How does the CEA plan to improve health insurance markets

According to a February 2019 report, the Council of Economic Advisors proposes to improve health insurance markets through three key policies: Eliminate the individual mandate Permitting more small businesses to form Association Health Plans Expanding short-term, limited-duration insurance (STLDI) plans The report claims that these changes will generate $450 billion in social surplus over the…

Estimating the price elasticity of demand through value-based formulary designs

In 2010, Premera Blue Cross (Premera), a large nonprofit health plan in the Pacific Northwest implemented a value-based formulary design for its beneficiaries.   In essence, enrollees could purchase high-value treatments for low copayments and low-value treatments for higher copayments.  Can we use this change from more standard to value-base formulary designs to estimate the price elasticity…

Managed Competition in 2018

Alain Einthoven is the father of managed competition.  In a recent Health Affairs article, he and Laurence C. Baker look ]at managed competition in California and ask whether the standard conception of managed competition needs to be altered. Before we get to the article, we first need to ask a basic question: what is managed competition?  The…

The importance of competition in ACA marketplaces

Competition matters for markets…even health care markets. A paper by Van Parys (2018) relies on a database of plan premium and market characteristics among states with federally-facilitated health insurance exchange Marketplaces.  In this analysis, she finds that: In 2018, Marketplace premiums were 50 percent ($180) higher, on average, in rating areas with monopolist insurers, compared…

Does health insurance save lives?

According to one study by Martin Anderson presented at the NBER’s Program on Health Economics meeting May 4, the answer is yes.  Dr. Anderson examines the changes in insurance coverage, health care utilization, and mortality after the expansion of Medicare coverage to all patients with end stage renal disease (ESRD).  The study finds that: …the expansions…

Medicaid and paperwork

When you buy a typical product, the vendor does its best to make the purchasing process as easy as possible.  There is a reason for this, clearly; they want your business.  State and federal governments, however, have no such incentive.  In fact, oftentimes reducing the number of people using government services saves money. Thus, it…

How did the Affordable Care Act affect the U.S. labor supply?

The Affordable Care Act (ACA) aimed to increase health insurance coverage largely through two pathways: (i) raising the income limits for individuals to qualify for Medicaid, (ii) creating new health insurance exchanges and health insurance subsidies to encourage the purchase of private health insurance among individuals that were not eligible for Medicaid.  Other provisions, such…