Essays on Health Insurance Markets with Regulated Competition

Abstract

This dissertation explores three issues relating to health insurance markets with regulated competition. First, I study how switching between health plans affects enrollees’ utilization of health services and their health outcomes. To overcome possible self-selection into switching I exploit plan exits in the Medicaid Managed Care regulated markets. I find that switching between plans disrupts beneficiaries’ care and leads to adverse health outcomes. Loss of access to familiar primary care physicians and changes in the network of providers, changes in drug formularies, and frictions in receiving prior authorizations for services - all may play a role in disrupting care after a switch. The second dissertation chapter studies whether providing a publicly-financed insurance through a regulated market of private managed care plans costs less to the government than a direct public fee-for-service program. The chapter focuses on disabled beneficiaries in Medicaid, and exploits county-level managed care enrollment mandates to identify the fiscal effect of transitioning them to private plans. We find that these transitions eventually increase Medicaid’s spending and we discuss how procurement rules may lead to this result. Lastly, I study risk adjustment systems, that reallocate funds among competing health insurers in regulated markets. Within the setting of the U.S. Marketplaces, I demonstrate how explicitly setting the level of utilization that triggers a claims-based risk adjustor, can both increase the system’s fit and decrease the incentive to game the system.