Consumer Response to a National Marketplace for Individual Health Insurance

23 Pages Posted: 20 May 2011

See all articles by Stephen L. Parente

Stephen L. Parente

University of Illinois at Urbana-Champaign - Department of Economics

Roger Feldman

University of Minnesota - Twin Cities - Department of Economics

Jean Marie Abraham

University of Minnesota - Twin Cities - School of Public Health

Yi Xu

University of Minnesota - Twin Cities

Date Written: June 2011

Abstract

The objective of this analysis is to simulate the difference between national and state-specific individual insurance markets on take-up of individual health insurance. This simulation analysis was completed in three steps. First, we reviewed the literature to characterize the state-specific individual insurance markets with respect to state regulations and to identify the effect of those regulations on health insurance premiums. Second, we used empirical data to develop premium estimates for the simulation that reflect case-mix as well as state-specific differences in health care markets. Third, we used a revised version of the 2005 Medical Expenditure Panel Survey (MEPS) to complete a set of simulations to identify the impact of three different scenarios for national market development. (National market estimates are based on the simulation model with competition among all 50 states and moderate impact assumptions.) We find evidence of a significant opportunity to reduce the number of uninsured under a proposal to allow the purchase of health insurance across state lines. The best scenario to reduce the uninsured, numerically, is competition among all 50 states with one clear winner. The most pragmatic scenario, with a good impact, is one winner in each regional market.

Suggested Citation

Parente, Stephen L. and Feldman, Roger and Abraham, Jean Marie and Xu, Yi, Consumer Response to a National Marketplace for Individual Health Insurance (June 2011). Journal of Risk and Insurance, Vol. 78, Issue 2, pp. 389-411, 2011. Available at SSRN: https://ssrn.com/abstract=1841266 or http://dx.doi.org/10.1111/j.1539-6975.2010.01393.x

Stephen L. Parente (Contact Author)

University of Illinois at Urbana-Champaign - Department of Economics ( email )

410 David Kinley Hall
1407 W. Gregory
Urbana, IL 61801
United States

Roger Feldman

University of Minnesota - Twin Cities - Department of Economics ( email )

271 19th Avenue South
15-205 Phillips-Wangensteen
Minneapolis, MN 55455
United States
612-624-5669 (Phone)

Jean Marie Abraham

University of Minnesota - Twin Cities - School of Public Health ( email )

15-223 Phillips-Wangensteen Building
Box 729, 420 Delaware Street SE
Minneapolis, MN 55455-0392
United States
612-625-4375 (Phone)

Yi Xu

University of Minnesota - Twin Cities ( email )

420 Delaware St. SE
Minneapolis, MN 55455
United States

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