Pricing Institutions and the Welfare Cost of Adverse Selection
To mitigate adverse selection in insurance markets, individuals are often mandated to buy at least a baseline plan, but may choose to opt into a premium plan. In some markets, such as US health exchanges, each plan is responsible for the full expenses of those who buy it ("total pricing")....
| Veröffentlicht in: | American Economic Journal: Microeconomics. - American Economic Association. - 9(2017), 2, Seite 139-148 |
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| Format: | Online-Aufsatz |
| Sprache: | English |
| Veröffentlicht: |
2017
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| Zugriff auf das übergeordnete Werk: | American Economic Journal: Microeconomics |
| Schlagworte: | Economics Business Applied sciences Health sciences |
| Zusammenfassung: | To mitigate adverse selection in insurance markets, individuals are often mandated to buy at least a baseline plan, but may choose to opt into a premium plan. In some markets, such as US health exchanges, each plan is responsible for the full expenses of those who buy it ("total pricing"). In other markets, such as the privately supplied "Medigap" top-ups to traditional government-provided Medicare, premium providers are only responsible for the incremental expenses they top up ("incremental pricing"). For parameter values calibrated to health exchanges, the shift from total to incremental pricing reduces the welfare loss from adverse selection by an order of magnitude. |
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| ISSN: | 19457685 |