Working Paper: NBER ID: w24156
Authors: Francesco Decarolis; Andrea Guglielmo; Calvin Luscombe
Abstract: Open enrollment periods are pervasively used in insurance markets to limit adverse selection risks resulting when enrollees can switch plans at will. We exploit a change in the open enrollment rules of Medicare Advatage to analyze how beneficiaries responded to the option of switching to a 5-star rated plan at anytime, in a setting where insurers adjusted premiums and benefit design to counterbalance the increased selection risk. We present three findings: within-year switches to 5-star plans increase by 7-16%; demand for 5-star plans across the years does not change; the enrollees who switch to a 5-star plan during the year are in better health status than those who do not switch.
Keywords: Medicare; Open Enrollment; Health Insurance; Adverse Selection
JEL Codes: I11; I18; L22
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| 5-star special enrollment period (SEP) (I11) | enrollment in Medicare Advantage plans (I13) |
| 5-star special enrollment period (SEP) (I11) | demand for 5-star plans (R22) |
| 5-star special enrollment period (SEP) (I11) | risk pools of 5-star plans (G52) |
| within-year switches to 5-star plans (Y10) | advantageous selection (C52) |