Working Paper: NBER ID: w28630
Authors: Adrianna L. McIntyre; Mark Shepard; Myles Wagner
Abstract: There is growing interest in market design using default rules and other choice architecture principles to steer consumers toward desirable outcomes. Using data from Massachusetts’ health insurance exchange, we study an "automatic retention" policy intended to prevent coverage interruptions among low-income enrollees. Rather than disenroll people who lapse in paying premiums, the policy automatically switches them to an available free plan until they actively cancel or lose eligibility. We find that automatic retention has a sizable impact, switching 14% of consumers annually and differentially retaining healthy, low-cost individuals. The results illustrate the power of defaults to shape insurance coverage outcomes.
Keywords: health insurance; automatic retention; market outcomes; consumer behavior; default rules
JEL Codes: D90; I13; I18
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| automatic retention policy (J26) | retention rates of enrollees (I21) |
| automatic retention policy (J26) | health insurance market outcomes (G52) |
| automatic retention (D25) | switching rates (C34) |
| retention rates of enrollees (I21) | risk pool of the market (G22) |
| automatic retention policy (J26) | duplication of coverage (G52) |