Is this evidence consistent with the predictions of the RS model? In other words, is this evidence consistent or inconsistent with adverse selection into insurance before the Massachusetts health reform? Explain why or why not. [Hint: think about the types of people who enrolled in insurance as a result of the mandate.]

EBK HEALTH ECONOMICS AND POLICY
7th Edition
ISBN:9781337668279
Author:Henderson
Publisher:Henderson
Chapter1: U.s. Medical Care: An Uncertain Future
Section: Chapter Questions
Problem 5QAP
icon
Related questions
Question

 In the early 2000s, the state of Massachusetts in the U.S. implemented a health reform aimed at enrolling people without health insurance into an insurance plan. The reform required people without health insurance (at least those who could afford it) to buy insurance, and put in place penalties on those who nevertheless chose not to buy insurance. Below is the abstract of a recent National Bureau of Economic Research working paper entitled “Health Reform, Health Insurance, and Selection: Estimating Selection into Health Insurance Using the Massachusetts Health Reform” by Martin Hackmann, Jonathan Kolstad, and Amanda Kowalski. The authors conducted a study of the effects of the Massachusetts reform. They write:

 

We implement an empirical test for selection into health insurance using changes in coverage induced by the introduction of mandated health insurance in Massachusetts. Our test examines changes in the cost of the newly insured relative to those who were insured prior to the reform. We find that counties with larger increases in insurance coverage over the reform period face the smallest increase in average hospital costs for the insured population...

 

  • Is this evidence consistent with the predictions of the RS model? In other words, is this evidence consistent or inconsistent with adverse selection into insurance before the Massachusetts health reform? Explain why or why not. [Hint: think about the types of people who enrolled in insurance as a result of the mandate.]
  • In the context of the RS model of adverse selection, what effect does mandating health insurance have on the utility of the robust people in the model? [Hint: Be careful to distinguish the cases of pooled and actuarially fairly priced insurance].

 

 

Expert Solution
trending now

Trending now

This is a popular solution!

steps

Step by step

Solved in 2 steps

Blurred answer
Knowledge Booster
Market for Pharmaceuticals
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, economics and related others by exploring similar questions and additional content below.
Similar questions
  • SEE MORE QUESTIONS
Recommended textbooks for you
EBK HEALTH ECONOMICS AND POLICY
EBK HEALTH ECONOMICS AND POLICY
Economics
ISBN:
9781337668279
Author:
Henderson
Publisher:
YUZU
Exploring Economics
Exploring Economics
Economics
ISBN:
9781544336329
Author:
Robert L. Sexton
Publisher:
SAGE Publications, Inc