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Adverse Selection in Medicaid: Evidence from Discontinuous Program Rules

Year: 2021

Type: report

Abstract: Recent expansions of Medicaid eligibility have come with increased experimentation with enrollee cost-sharing.In this paper, we exploit a discontinuous premium increase at the federal poverty level in Michigan's Medicaid expansion program to test low-income individuals' sensitivity to premiums using linked enrollment and claims data.At the cutoff, average premiums increase by $3.15 and the probability of disenrollment increases by 2.3 percentage points.Increased disenrollment occurs among those with fewer documented medical needs at baseline, but not among those with greater medical needs.These results suggest healthier low-income individuals may be sensitive to even modest health insurance premiums, and that premiums may induce adverse selection in Medicaid plans.

Source: National Bureau of Economic Research

DOI: 10.3386/w28762

Authors: Betsy Cliff, Sarah Miller, Jeffrey Kullgren, John Ayanian, Richard Hirth

Institutions: National Bureau of Economic Research, University of Michigan, University of Illinois Chicago, Michigan Medicine

Language: English

Topic: Healthcare Policy and Management

Subfield: Economics and Econometrics

Field: Economics, Econometrics and Finance

Domain: Social Sciences

SDGs: Reduced inequalities, No poverty, Good health and well-being

Open Access status: green

Funders: U.S. Department of Health and Human Services, University of Michigan, Michigan Department of Health and Human Services, Agency for Healthcare Research and Quality, Centers for Medicare and Medicaid Services, Institute for Healthcare Policy and Innovation, University of Michigan

OpenAlex ID: W3161625076

Cites: 29

Cited by: 5

Related to: 10