Remedies for Sick Insurance
Daniel L. McFadden
University of California, Berkeley - Department of Economics; National Bureau of Economic Research (NBER)
affiliation not provided to SSRN
Autonomous University of Barcelona - Department of Business Administration; International Health Economics Association (iHEA)
NBER Working Paper No. w17938
This expository paper describes the factors that contribute to failure of health insurance markets, and the regulatory mechanisms that have been and can be used to combat these failures. Standardized contracts and creditable coverage mandates are discussed, along with premium support, enrollment mandates, guaranteed issue, and risk adjustment, as remedies for selection-related market damage. An overall conclusion of the paper is that the design and management of creditable coverage mandates are likely to be key determinants of the performance of the health insurance exchanges that are a core provision of the PPACA of 2010. Enrollment mandates, premium subsidies, and risk adjustment can improve the stability and relative efficiency of the exchanges, but with carefully designed creditable coverage mandates are not necessarily critical for their operation.
Number of Pages in PDF File: 47
Date posted: March 31, 2012
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