Working Paper: NBER ID: w17748
Authors: Martin B. Hackmann; Jonathan T. Kolstad; Amanda E. Kowalski
Abstract: We implement an empirical test for selection into health insurance using changes in coverage induced by the introduction of mandated health insurance in Massachusetts. Our test examines changes in the cost of the newly insured relative to those who were insured prior to the reform. We find that counties with larger increases in insurance coverage over the reform period face the smallest increase in average hospital costs for the insured population, consistent with adverse selection into insurance before the reform. Additional results, incorporating cross-state variation and data on health measures, provide further evidence for adverse selection.
Keywords: health insurance; adverse selection; Massachusetts health reform
JEL Codes: H51; I18
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| increased insurance coverage (G52) | healthier insured pool (I13) |
| health measures (rates of diabetes and regular exercise) (I12) | expected costs of the insured population (G52) |
| cost of the marginal enrollee below the average cost of those already insured (G52) | adverse selection (D82) |
| increased insurance coverage during the Massachusetts health reform (I13) | smaller increases in average hospital costs (I10) |