Consumer choice in the market for health insurance
Gee, Emily Rose
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A key feature of the market for health insurance is selection: a consumer's decision to purchase coverage can affect the costs for producers and the prices faced by other consumers. In three essays, I explore factors that influence consumers to take up insurance coverage, selection in market where a new insurance product was introduced, and the effects of a recent policy to expand coverage among young adults. The first essay examines whether language barriers and network effects can explain disparities in Medicaid participation among low-income immigrants. Using the American Community Survey, I show that linguistic networks facilitate Medicaid enrollment among non-English speaking adults. The identification method follows Bertrand et al. (2000) and employs local variation in the density of immigrant populations and nationwide variation in Medicaid participation among ethnic groups. I also find that the availability of foreign-language Medicaid information online is associated with significantly higher participation. The second essay examines consumer choice in the context of a health insurance exchange. Using data from the Federal Employees Health Benefits program, I examine the extent to which the sudden introduction of high-deductible plans into the system in 2004 may have generated adverse selection. While entry by the newer plan type does not appear to affect premiums of more traditional plan types for federal workers, enrollees in high-deductible plans are more likely to be younger and male. The final essay analyzes one of the earliest coverage-related provisions of the Affordable Care Act to take effect, the extension of health insurance coverage to child dependents up to age 26. Survey data reveal the law resulted in a marked increase in the number of young adults covered by private insurance. Analysis of medical claims data from private health insurance shows a relative decrease in average spending among young adults after the law took effect, implying that the dependent coverage provision brought healthier young adult individuals into the risk pool.