Private Markets, Public Aims: Welfare Analyses of Regulated Competition in the ACA Marketplaces

Abstract

Chapter 1, “Demand Heterogeneity and Deadweight Loss in the Market for Individual Health Insurance,” explores the connection between demographic disparities and rising premiums within the ACA marketplaces, extending the Einav-Finkelstein model of selection to incorporate market subsegments (demographic groups), which vary according to both ‘hassle costs’ of enrollment and expected health expenditures. It then uses data from the 2014-2015 enrollment period of the “Covered California” marketplace to generate exploratory estimates of the welfare losses associated with known submarket-level access barriers. As an example, it estimates that the penalty associated with participation in a foreign-language-only submarket may be equivalent to an increase in monthly insurance premium of approximately $57/month and result in a market premium increase of $4.18/month, creating approximately $38 million in net welfare losses annually. Chapter 2, “Provider Access Under Network-Narrowing Competition: Evidence from the ACA Marketplaces,” explores the impact of network-narrowing competition in on outpatient provider networks within the marketplaces, using the 2016-2018 enrollment period in Michigan as a case study. It finds that differential network narrowing did occur, and that this narrowing tended to differentially affect non-metropolitan providers, as well as providers in obstetrics/gynecology and mental health. It also suggests that narrowing has led to a compositional shift toward advanced practice providers (especially physicians’ assistants and nurse practitioners) relative to physicians across specialties. Chapter 3, “Two Wrongs: Bilateral Concentration and Network Composition: evidence from the ACA Marketplaces” explores the impact of bilateral (insurer and provider) concentration on marketplace network construction, using Michigan’s 2016-2017 enrollment periods as a case study. It finds that both insurer and provider concentration at the county level were significant predictors of provider inclusion in marketplace plans, and that these relationships varied across provider type, practice location, and specialty. In general, provider concentration at the county level tended to increase the likelihood that any given provider within that county would secure a marketplace contract. This effect was even more pronounced for advanced practice providers, providers in primary care, and hospital-based specialists.