58 Pages Posted: 2 Apr 2012 Last revised: 31 Jan 2014
Date Written: January 30, 2014
In the early 1990s, several U.S. states enacted community rating regulations to equalize the health insurance premiums paid by the healthy and the sick. Consistent with severe adverse selection pressures, their private coverage rates fell by around 8 percentage points more than rates in comparable markets over subsequent years. By the early 2000s, following substantial public insurance expansions, coverage rates in several of these states had improved significantly. As theory predicts, recoveries were largest where public coverage expanded disproportionately for high cost populations. The analysis highlights that the incidence of public insurance and community rating regulations are tightly intertwined.
Keywords: Community Rating, Medicaid, Health Insurance, Social Insurance, Redistribution, Fiscal Competition
JEL Classification: H51, H11, H53, I11, I18, I38
Suggested Citation: Suggested Citation