Estimating Welfare in Insurance Markets Using Variation in Prices: Comment

American Economic Journal: Microeconomics, Forthcoming

10 Pages Posted: 26 May 2016 Last revised: 6 Jun 2016

See all articles by E. Glen Weyl

E. Glen Weyl

Microsoft Research New York City; RadicalxChange Foundation

Andre Veiga

Imperial College London

Date Written: June 1, 2015

Abstract

Einav, Finkelstein and Cullen (2010) find small welfare costs of adverse selection into a premium and out of a baseline health insurance plan offered by an employer. In their model, only the premium plan is required to break even and we argue this drives their conclusion: if the baseline plan were also required to break even, their data, and a wide range of estimates around it, would lead to full collapse of the premium market.

Note: This is a working paper superseded by "Pricing Institutions and the Welfare Cost of Adverse Selection", Forthcoming in the American Economic Journal: Microeconomics and is available as a working paper at http://ssrn.com/abstract=2784563. It is available here for archival purposes as this version contains results left out of the version for publication.

JEL Classification: D41, D82, I13

Suggested Citation

Weyl, Eric Glen and Veiga, Andre, Estimating Welfare in Insurance Markets Using Variation in Prices: Comment (June 1, 2015). American Economic Journal: Microeconomics, Forthcoming. Available at SSRN: https://ssrn.com/abstract=2784563 or http://dx.doi.org/10.2139/ssrn.2784563

Eric Glen Weyl (Contact Author)

Microsoft Research New York City ( email )

641 Avenue of the Americas
7th Floor
New York, NY 10011
United States
8579984513 (Phone)

HOME PAGE: http://www.glenweyl.com

RadicalxChange Foundation ( email )

HOME PAGE: http://www.radicalxchange.org

Andre Veiga

Imperial College London ( email )

South Kensington Campus
Exhibition Road
London, Greater London SW7 2AZ
United Kingdom

Register to save articles to
your library

Register

Paper statistics

Downloads
29
Abstract Views
396
PlumX Metrics