In the United States, households obtain health insurance through distinct market segments. We explore the economics of this segmentation by comparing coverage provided through small employers versus the individual marketplace. Using data from Oregon, we find households with group coverage spend 26% less on covered health care than households with individual coverage yet face higher markups. We develop a model of plan choice and health spending to estimate preferences in both markets and evaluate integration policies. In our setting, pooling can both mitigate adverse selection in the individual market and benefit small group households without raising taxpayer costs.
Authors
- Acknowledgements & Disclosure
- We thank conference and seminar participants at New York University and the University of Pennsylvania for helpful feedback. We also received valuable input from Eduardo Azevedo, Gautam Gowrisankaran, Robin Lee, Victoria Marone, and Pietro Tebaldi. We thank Quan Le, Gabriel Lesnick, and Nicole Ng for excellent research assistance. The views expressed herein do not represent the views of the U.S. Department of Justice. Throughout this paper, we use the term "market" in ways that do not necessarily reflect the product and geographic boundaries of antitrust markets. The views expressed herein are those of the authors and do not necessarily reflect the views of the National Bureau of Economic Research.
- DOI
- https://doi.org/10.3386/w29406
- Published in
- United States of America
