Restrictive Rating and Adverse Selection in Health Insurance

23 Pages Posted: 27 Jul 2018

See all articles by Patricia Born

Patricia Born

Florida State University

Tice Sirmans

Illinois State University

Date Written: July 5, 2018

Abstract

Evidence of adverse selection in insurance markets is well-documented in the literature. Recent healthcare reform in the United States imposed substantial changes to health insurer operations, including rating restrictions. We provide evidence of the presence of adverse selection following the enactment of the Patient Protection and Affordable Care Act of 2010. Using a rich, unique dataset consisting of information on health insurance plans from multiple health insurers, across states for the years 2013-2017, we document a statistically significant correlation between coverage and risk, indicating the presence of adverse selection that varies over time and across the individual and group markets.

Keywords: Adverse Selection, Asymmetric Information, Health Insurance, Affordable Care Act

JEL Classification: D82, G22, I13

Suggested Citation

Born, Patricia and Sirmans, Tice, Restrictive Rating and Adverse Selection in Health Insurance (July 5, 2018). Available at SSRN: https://ssrn.com/abstract=3208899 or http://dx.doi.org/10.2139/ssrn.3208899

Patricia Born

Florida State University ( email )

College of Business
Tallahassee, FL 32306
United States
8506647884 (Phone)

Tice Sirmans (Contact Author)

Illinois State University ( email )

Normal, IL 61790
United States

Do you have negative results from your research you’d like to share?

Paper statistics

Downloads
83
Abstract Views
574
Rank
539,187
PlumX Metrics