Michael Dickstein, Kate Ho, and Nathaniel Mark's new NBER working paper, "Market Segmentation and Competition in Health Insurance"October 26, 2021
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.
Michael Dickstein is an Assistant Professor of Economics at NYU Stern.
Read the full paper here.