47 Pages Posted: 21 Jul 2009
Date Written: July 2009
This study assesses the factors influencing the movement of people across health plans. We distinguish three types of cost-related transitions: adverse selection, the movement of the less healthy to more generous plans; adverse retention, the tendency for people to stay where they are when they get sick; and aging in place, where lack of all movement makes plans with initially older enrollees increase in cost over time. Using data from the Group Insurance Commission in Massachusetts, we show that aging in place and adverse selection are both quantitatively important. Each can materially impact equilibrium enrollments, especially when premiums to enrollees reflect these costs.
Suggested Citation: Suggested Citation
Cutler, David M. and Lincoln, Bryan and Zeckhauser, Richard J., Selection Stories: Understanding Movement Across Health Plans (July 2009). NBER Working Paper No. w15164. Available at SSRN: https://ssrn.com/abstract=1435622
By Sherry Glied