Can Automatic Retention Improve Health Insurance Market Outcomes?

22 Pages Posted: 5 Apr 2021 Last revised: 25 Mar 2023

See all articles by Adrianna L. McIntyre

Adrianna L. McIntyre

Harvard University

Mark Shepard

Harvard University - Harvard Kennedy School (HKS)

Myles Wagner

Harvard University

Multiple version iconThere are 2 versions of this paper

Date Written: April 2021

Abstract

There is growing interest in market design using default rules and other choice architecture principles to steer consumers toward desirable outcomes. Using data from Massachusetts’ health insurance exchange, we study an "automatic retention" policy intended to prevent coverage interruptions among low-income enrollees. Rather than disenroll people who lapse in paying premiums, the policy automatically switches them to an available free plan until they actively cancel or lose eligibility. We find that automatic retention has a sizable impact, switching 14% of consumers annually and differentially retaining healthy, low-cost individuals. The results illustrate the power of defaults to shape insurance coverage outcomes.

Suggested Citation

McIntyre, Adrianna L. and Shepard, Mark and Wagner, Myles, Can Automatic Retention Improve Health Insurance Market Outcomes? (April 2021). NBER Working Paper No. w28630, Available at SSRN: https://ssrn.com/abstract=3819520

Adrianna L. McIntyre (Contact Author)

Harvard University ( email )

1875 Cambridge Street
Cambridge, MA 02138
United States

Mark Shepard

Harvard University - Harvard Kennedy School (HKS) ( email )

79 John F. Kennedy Street
Cambridge, MA 02138
United States

Myles Wagner

Harvard University

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