Does Limiting Allowable Rating Variation in the Small Group Health Insurance Market Affect Employer Self‐Insurance?

27 Pages Posted: 9 Aug 2018

See all articles by Erin Trish

Erin Trish

University of Southern California - Schaeffer Center for Health Policy and Economics

Bradley Herring

Emory University - Department of Health Policy and Management

Date Written: September 2018

Abstract

The Affordable Care Act (ACA) imposes adjusted community rating in the small group market, which employers can avoid by self‐insuring, raising concerns about adverse selection. We evaluate the impact of limiting allowable rating variation on employer self‐insurance across industries with varied health risk, using cross‐state variation in pre‐ACA rating regulations, the nationally representative 2008–2013 KFF/HRET Employer Health Benefits Survey, and a triple‐difference regression approach. We find that lower risk employers subject to laws limiting allowable premium rating variation have a predicted probability of self‐insurance that is about 18 percentage points higher than otherwise‐similar higher risk employers, suggesting that these selection concerns are warranted.

Suggested Citation

Trish, Erin and Herring, Bradley, Does Limiting Allowable Rating Variation in the Small Group Health Insurance Market Affect Employer Self‐Insurance? (September 2018). Journal of Risk and Insurance, Vol. 85, Issue 3, pp. 607-633, 2018. Available at SSRN: https://ssrn.com/abstract=3228196 or http://dx.doi.org/10.1111/jori.12184

Erin Trish (Contact Author)

University of Southern California - Schaeffer Center for Health Policy and Economics ( email )

635 Downey Way
Los Angeles, CA 90089-3333
United States

Bradley Herring

Emory University - Department of Health Policy and Management ( email )

1518 Clifton Road NE
Atlanta, GA 30322
United States

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