Working Paper: NBER ID: w9167
Authors: Melissa A. Thomasson
Abstract: This paper uses a unique data set from 1957 to examine whether or not Blue Cross and Blue Shield suffered from an adverse selection death spiral after for-profit commercial insurance companies entered the market for health insurance. Results suggest that moving to experience rating may have helped the Blues counteract adverse selection in the group health insurance market. Adverse selection posed a greater problem for the Blues in the market for individual health insurance, possibly because of differences in the way the Blues screened potential enrollees relative to commercial insurance companies.
Keywords: No keywords provided
JEL Codes: I11; N72
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Entry of for-profit commercial insurance companies (G22) | Selection death spiral for Blue Cross and Blue Shield (I13) |
| Healthier enrollees abandon Blue Cross and Blue Shield (I13) | Increased medical expenditures for Blue Cross and Blue Shield (H51) |
| Increased medical expenditures for Blue Cross and Blue Shield (H51) | Shift towards higher-risk enrollees (G52) |
| Experience rating (G22) | Mitigation of adverse selection effects in group health insurance market (G52) |
| Less rigorous screening practices (I19) | Adverse selection in individual market for Blue Cross and Blue Shield (G52) |
| Adverse selection (D82) | Driving up costs for Blue Cross and Blue Shield (I13) |