Health Reform, Health Insurance, and Selection: Estimating Selection into Health Insurance Using the Massachusetts Health Reform

• Published in: The American economic review Vol. 102; no. 3; pp. 498 - 501
• Main Authors: Hackmann, Martin B., Kolstad, Jonathan T., Kowalski, Amanda E.
• Format: Journal Article
• Language: English
• Published: United States American Economic Association 01-05-2012
• Subjects: Adverse selection; Average cost; Behavioral Risk Factor Surveillance System; Community rating; Consumer behavior; Consumer Price Index; Economic theory; Economics; Empirical tests; Employer provided health insurance; Estimates; Health care; Health care policy; Health expenditure; Health insurance; Health policy; Health technology assessment; Hospital costs; Insurance coverage; Insurance expenses; Insurance industry; Insurance premiums; Massachusetts; Patient Protection & Affordable Care Act 2010-US; Population; Regulatory reform; THE 2006 MASSACHUSETTS HEALTH REFORM; U.S.A
• ISSN: 0002-8282; 1944-7981
• DOI: 10.1257/aer.102.3.498

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, consistent with adverse selection into insurance before the reform. Additional results, incorporating cross-state variation and data on health measures, provide further evidence for adverse selection. [PUBLICATION ABSTRACT]