Essays on Health Insurance Markets

Abstract

The first chapter studies behavioral mechanisms to expand health insurance coverage. In health insurance markets where regulators limit insurers' ability to price on the health status of individuals, a traditional regulatory intervention to protect the market from adverse selection and expand coverage among young and healthy people is mandating insurance coverage. In this chapter, I analyze an alternative, behavioral mechanism in the context of the Affordable Care Act Marketplaces: the automatic enrollment of the uninsured with possible opt-out. I build a theoretical model which shows that this nudging policy increases coverage rates, and the size of its benefit depends on the strength of consumer inertia. Using an individual-level panel dataset on health insurance plan choice and claims, I estimate a structural model of health insurance demand and supply in the presence of switching costs. Simulating the effects of the policy, I find that auto-enrollment can increase enrollment rates by over 60% and reduce annual premiums by $300. Moreover, I show that taking into account the heterogeneity of preferences is essential when designing default plans for auto-enrolled consumers. Defaulting everyone into the same contract type leads to more quitting due to inefficient matching and it may also indirectly increase adverse selection on the intensive margin through the price adjustment mechanism. The results of this paper suggest that in order to avoid these problems and maximize the benfits of auto-enrollment in selection markets, it is important to design smart default policies. The second chapter explores how changes in cost sharing affect consumers' demand for health care. Cost sharing reduction (CSR) subsidies are a less well-known provision of the Affordable Care Act (ACA) that aimed to make private health insurance coverage more affordable. These subsidies discontinuously increase the share of expenses paid by the insurer as enrollee income crosses the eligibility cutoffs. This specific subsidy design provides a unique setting to identify moral hazard in health care utilization from observational data that is a major empirical challenge in the literature. In this chapter, I combine individual-level post-subsidy premium data from an All Payer Claims Database with information on plan-level base prices to recover the amount of the premium subsidy. Applying the ACA's premium subsidy formula backwards, I am able to estimate family income. Using this imputed income, I exploit a sharp regression discontinuity design to study the impact of changes in actuarial value on consumer behavior. I find significant increases in health care utilization at income levels associated with the CSR subsidy eligibility cutoffs. These results imply that individuals tend to use more health care services only due to the fact that the insurer becomes responsible for a larger share of their expenditures. These results provide insights about the price elasticity of demand for medical care in a new context. The third chapter evaluates the impact of the ACA on HPV vaccination. Rates of completion of the HPV vaccine series remain suboptimal in the US. The effects of the ACA on HPV vaccine completion are largely unknown. The aim of this study was to examine the associations between the ACA's 2010 provisions and 2014 insurance expansions with HPV vaccine completion by sex and health insurance type. Using 2009-2015 public and private health insurance claims, we conducted a logistic regression model to examine the associations between the ACA policy changes with HPV vaccine completion as well as interactions by sex and health insurance type. Among females and males who initiated the HPV vaccine, 27.6% and 28.0%, respectively, completed the series within 12 months. Among females, the 2010 ACA provision was associated with increases in HPV vaccine completion for the privately-insured and Medicaid enrollees. The 2014 health insurance expansions were associated with increases in vaccine completion for females with private insurance and Medicaid. Among males, the 2014 ACA reforms were associated with increases in HPV vaccine completion for the privately-insured and Medicaid enrollees. Despite low HPV vaccine completion overall, both sets of ACA provisions increased completion among females and males. Our results suggest that expanding Medicaid across the remaining states could increase HPV vaccine completion among publicly-insured youth and prevent HPV-related cancers.