are health insurance markets competitive to gauge the competitiveness of the group health insurance industry i investigate whether health insurers charge higher premiums ceteris paribus to more profitable firms such direct price discrimination is feasible only in imperfectly competitive settings using a proprietary national database of health plans offered by a sample of large multisite firms from 1998 2005 i find firms with positive profit shocks subsequently face higher premium growth even for the same health plans moreover within a given firm those sites located in concentrated insurance markets experience the greatest premium increases the findings suggest health care insurers are exercising market power in an increasing number of geographic markets

mandate based health reform and the labor market evidence from the massachusetts reform we model the labor market impact of the key provisions of the national and massachusetts mandate based health reforms individual mandates employer mandates and subsidies we characterize the compensating differential for employer sponsored health insurance eshi and the welfare impact of reform in terms of sufficient statistics we compare welfare under mandate based reform to welfare in a counterfactual world where individuals do not value eshi relying on the massachusetts reform we find that jobs with eshi pay 2812 less annually somewhat less than the cost of eshi to employers accordingly the deadweight loss of mandate based health reform was approximately 8 percent of its potential size

multidimensional private information market structure and insurance markets we investigate whether selection based on multidimensional private information in risks and risk preferences can under different market structures result in a negative correlation between insurance coverage and ex post realization of risk we show that under perfect competition selection based on multidimensional private information does not result in the negative correlation property unless there is a sufficiently high loading factor however it is possible to generate the negative correlation property under monopoly when risk and risk preference types are sufficiently negative dependent we also clarify the connections between important concepts such as adverse advantageous selection and positive negative correlation property

cohort mortality risk or adverse selection in annuity markets abstract we show that tests for adverse selection in annuity markets using prices are not identified within the uk annuity market different annuity products create the potential for a rothschild stiglitz separating equilibrium as different risk types could choose different annuities empirical analyses using the money s worth suggest that prices are indeed consistent with this explanation however we show that this pattern of annuity prices would also result from the actions of regulated annuity providers who must reserve against cohort mortality risk annuity products that might attract different consumer risk types also have different risks for the provider

an empirical analysis of competitive nonlinear pricing abstract we estimate a model of competitive nonlinear pricing with multidimensional preference heterogeneity using individual level data on advertisements bought by local businesses e g doctors electricians from two yellow page directories in one u s city market variation in individual choices and payments allows us to identify the joint density of preferences marginal costs of publishing and common utility parameters our estimates suggest substantial welfare loss due to asymmetric information comparing duopoly outcomes with counterfactual monopoly outcomes we find that with less competition i producer surplus increases substantially ii more low type consumers are excluded iii product variety increases but benefits accrue only to the high type consumers iv total consumer surplus decreases v but its distribution across consumers does not change

pricing and welfare in health plan choice premiums in health insurance markets frequently do not reflect individual differences in costs either because consumers have private information or because prices are not risk rated this creates inefficiencies when consumers self select into plans we develop a simple econometric model to study this problem and estimate it using data on small employers we find a welfare loss of 2 11 percent of coverage costs compared to what is feasible with risk rating only about one quarter of this is due to inefficiently chosen uniform contribution levels we also investigate the reclassification risk created by risk rating individual incremental premiums finding only a modest welfare cost

the welfare cost of unpriced heterogeneity in insurance markets we consider the welfare loss of unpriced heterogeneity in insurance markets which results when private information or regulatory constraints prevent insurance companies to set premiums reflecting expected costs we propose a methodology which uses survey data to measure this welfare loss after identifying some types which determine expected risk and insurance demand we derive the key factors defining the demand and cost functions in each market induced by these unobservable types these are used to quantify the efficiency costs of unpriced heterogeneity we apply our methods to the us long term care and medigap insurance markets where we find that unpriced heterogeneity causes substantial inefficiency

using survey data to test standard propositions regarding exchange rate expectations survey data provide a measure of exchange rate expectations superior to the forward rate in that no risk premium interferes we estimate extrapolative adaptive and regressive models of expectations static or random walk expectations and bandwagon expectations are rejected current appreciation generates the expectation of future depreciation because variables other than the contemporaneous spot rate receive weight in comparing expectations to the process governing the spot rate we find statistically significant bias no variable is as ubiquitous in international financial theory and yet as elusive empirically as investors expectations regarding exchange rates in the past expectations have been modeled in an ad hoc way often by using the forward exchange rate there is however a serious problem with using the forward discount as the measure of the expected change in the exchange rate in that the two may not be equal the gap that may separate the forward discount and expected depreciation is generally interpreted as a risk premium most of the large empirical literature testing the unbiasedness of the forward exchange rate for example has found it necessary either arbitrarily to assume away the existence of the risk premium if the aim

estimating the tradeoff between risk protection and moral hazard with a nonlinear budget set model of health insurance insurance induces a tradeoff between the welfare gains from risk protection and the welfare losses from moral hazard empirical work traditionally estimates each side of the tradeoff separately potentially yielding mutually inconsistent results i develop a nonlinear budget set model of health insurance that allows for both simultaneously nonlinearities in the budget set arise from deductibles coinsurance rates and stoplosses that alter moral hazard as well as risk protection i illustrate the properties of my model by estimating it using data on employer sponsored health insurance from a large firm

health and mortality delta assessing the welfare cost of household insurance choice we develop a pair of risk measures health and mortality delta for the universe of life and health insurance products a life cycle model of insurance choice simplifies to replicating the optimal health and mortality delta through a portfolio of insurance products we estimate the model to explain the observed variation in health and mortality delta implied by the ownership of life insurance annuities including private pensions and long term care insurance in the health and retirement study for the median household aged 51 to 57 the lifetime welfare cost of market incompleteness and suboptimal choice is 3 2 of total wealth

asymmetric information in insurance general testable implications several recent articles on empirical contract theory and insurance have tested for a positive correlation between coverage and ex post risk as predicted by standard models of pure adverse selection or pure moral hazard we show here that the positive correlationproperty can be extended to general setups competitive insurance markets and cases where risk aversion is public we test our results on a french dataset our tests confirm that the estimated correlation is positive they also suggest the presence of market power

the changing role of government in financing health care an international perspective this paper explores the changing role of government involvement in health care financing policy outside the united states it provides a review of the economics literature in this area to elucidate the implications of recent policy changes on efficiency costs and quality our review reveals that there has been some convergence in policies adopted across countries to improve financing incentives and encourage efficient use of health services in the case of risk pooling all countries with competing pools experience similar difficulties with selection and are adopting more sophisticated forms of risk adjustment in the case of hospital competition the key drivers of success appear to be what is competed on and measurable rather than whether the system is public or private in the case of both the success of performance related pay for providers and issues resulting from wait times evidence differs within and across jurisdictions however the evidence does suggest that some governments have effectively reduced wait times when they have chosen explicitly to focus on achieving this goal many countries are exploring new ways of generating revenues for health care to enable them to cope with significant cost growth but there is little evidence to suggest that collection mechanisms alone are effective in managing the cost or quality of care jel h51 i11 i18

observing unobservables identifying information asymmetries with a consumer credit field experiment information asymmetries are important in theory but difficult to identify in practice we estimate the presence and importance of hidden information and hidden action problems in a consumer credit market using a new field experiment methodology we randomized 58 000 direct mail offers to former clients of a major south african lender along three dimensions i an initial offer interest rate featured on a direct mail solicitation ii a contract interest rate that was revealed only after a borrower agreed to the initial offer rate and ii a dynamic repayment incentive that was also a surprise and extended preferential pricing on future loans to borrowers who remained in good standing these three randomizations combined with complete knowledge of the lender s information set permit identification of specific types of private information problems our setup distinguishes hidden information effects from selection on the offer rate via unobservable risk and anticipated effort from hidden action effects via moral hazard in effort induced by actual contract terms we find strong evidence of moral hazard and weaker evidence of hidden information problems a rough estimate suggests that perhaps 13 to 21 of default is due to moral hazard asymmetric information thus may help explain the prevalence of credit constraints even in a market that specializes in financing high risk borrowers

tiered co payments pricing and demand in reference price markets for pharmaceuticals health insurance companies curb price insensitive behavior and the moral hazard of insureds by means of cost sharing such as tiered co payments or reference pricing in drug markets this paper evaluates the effect of price limits below which drugs are exempt from co payments on prices and on demand first using a difference in differences estimation strategy we find that the new policy decreases prices by 5 percent for generics and increases prices by 4 percent for brand name drugs in the german reference price market second estimating a nested logit demand model we show that consumers appreciate co payment exempt drugs and calculate lower price elasticities for brand name drugs than for generics this explains the different price responses of brand name and generic drugs and shows that price related co payment tiers are an effective tool to steer demand to low priced drugs

capital income taxation and international portfolio choice abstract distortionary proportional capital income taxation is shown to cause both static effects via portfolio re allocation and dynamic effects via changes in the value of a claim to future transfers as well as via perceived changes in the future investment opportunity set the stochastic structure of returns to investment is important for understanding the consequences of a unilateral increase in the domestic tax rate a government choosing optimal tax policy makes a tradeoff between the increase in the perceived value of future transfers and the distortion to portfolio allocation produced by taxation with corporate taxation the optimal tax rate is positive

evidence on adverse selection equilibrium signaling and cross subsidization in the insurance market the configuration of equilibrium in the market for automobile collision insurance is examined empirically by representing the premium deductible menu and the demand function as a standard hedonic system using contractual data from a representative insurer we estimate a reduced form hedonic premium equation and the inverse of the marginal bid equation for insurance coverage the data reveal an equilibrium with adverse selection and market signaling but lead us to reject the hypothesis that high risks receive contracts subsidized by low risks

the incidence of mandated maternity benefits i consider the labor market effects of mandates which raise the costs of employing a demographically identifiable group the efficiency of these policies will be largely dependent on the extent to which their costs are shifted to group specific wages i study several state and federal mandates which stipulated that childbirth be covered comprehensively in health insurance plans raising the relative cost of insuring women of childbearing age i find substantial shifting of the costs of these mandates to the wages of the targeted group correspondingly i find little effect on total labor input for that group jel 118 j32 h51 in an era of tight fiscal budget constraints mandating employer provision of workplace benefits to employees is an attractive means for a government to finance its policy agenda consequently in recent years there has been a growth of interest in mandated benefits as a tool of social policy for example the centerpiece of president bill clinton s health care proposal is mandated employer provision of health insurance and more than 20 states have man

the impact of health care reform on hospital and preventive care evidence from massachusetts in april 2006 massachusetts passed legislation aimed at achieving near universal health insurance coverage the key features of this legislation were a model for national health reform passed in march 2010 the reform gives us a novel opportunity to examine the impact of expansion to near universal coverage state wide among hospital discharges in massachusetts we find that the reform decreased uninsurance by 36 relative to its initial level and to other states reform affected utilization by decreasing length of stay the number of inpatient admissions originating from the emergency room and preventable admissions at the same time hospital cost growth did not increase

liquidity constraints and imperfect information in subprime lending ditions for precisely the population that is most likely to have a difficult time obtaining credit those with low incomes and poor credit histories these consumers who typically cannot qualify for regular bank loans comprise the so called subprime market because the company we study originates subprime loans its loan applications and transaction records provide an unusual win dow into the consumption and borrowing behavior of households that are rationed in primary credit markets moreover we track loan repayments allowing us to analyze the difficulties in lending to the subprime population we begin by documenting the importance of short term liquidity constraints for individuals in our sample we present two pieces of evidence both are based on purchasing behavior and indicate a high sensitivity to cash on hand first we document a dramatic degree of demand seasonality associated with tax rebates overall demand is almost 50 percent higher during tax rebate season than during other parts of the year this seasonal effect varies with household

perfect competition in markets with adverse selection this paper proposes a perfectly competitive model of a market with adverse selection prices are determined by zero profit conditions and the set of traded contracts is determined by free entry crucially for applications contract characteristics are endogenously determined consumers may have multiple dimensions of private information and an equilibrium always exists equilibrium corresponds to the limit of a differentiated products bertrand game we apply the model to establish theoretical results on the equilibrium effects of mandates mandates can increase efficiency but have unintended consequences with adverse selection an insurance mandate reduces the price of low coverage policies which necessarily has indirect effects such as increasing adverse selection on the intensive margin and causing some consumers to purchase less coverage

paying for health insurance the trade off between competition and adverse selection we use data on health plan choices by employees of harvard university to compare the benefits of insurance competition with the costs of adverse selection moving to a voucher type system induced significant adverse selection with a welfare loss of 2 to 4 percent of baseline spending but increased competition reduced harvard s premiums by 5 to 8 percent the premium reductions came from insurer profits so while harvard was better off the net effect for society was only the adverse selection loss adverse selection can be minimized by adjusting voucher amounts for individual risk we discuss how such a system would work governments are increasingly turning to market forces as a way to limit the cost of social insurance traditionally social insurance programs were operated as nonmarket goods governments mandated participation in a central program collected revenues to finance the program and ran the insurance system there was no role for competition among suppliers in providing the basic benefit as the costs of social insurance have increased however the centralized model of social insurance is coming under increasing strain in the united states for example recent proposals have called for replacing the medicare program with a health care voucher for the elderly aaron and reischauer 1995 cutler 1996 the voucher would guarantee people a basic insurance plan but the plans would be privately run competition among plans would generate plan premiums and enrollments similarly longstanding proposals for social security reform have called for replacing the current system with a system of individual accounts where people would make saving investment and annuitization decisions on their own advisory council on social security 1996 feldstein 1996 the trend is not just domestic in the united kingdom the national health service has moved to encourage more competition in recent years with the establishment of hospital trusts that bid for patients and partially fixed payments to physicians

selection in health insurance markets and its policy remedies selection adverse or advantageous is the central problem that inhibits the smooth efficient functioning of competitive health insurance markets even and perhaps especially when consumers are well informed decision makers and insurance markets are highly competitive and offer choice such markets may function inefficiently due to risk selection selection can cause markets to unravel with skyrocketing premiums and can cause consumers to be under or overinsured in its simplest form adverse selection arises due to the tendency of those who expect to incur high health care costs in the future to be the most motivated purchasers the costlier enrollees are more likely to become insured rather than to remain uninsured and conditional on having health insurance the costlier enrollees sort themselves to the more generous plans in the choice set these dual problems represent the primary concerns for policymakers designing regulations for health insurance markets in this essay we review the theory and evidence concerning selection in competitive health insurance markets and discuss the common policy tools used to address the problems it creates we emphasize the two markets that seem especially likely to be targets of reform in the short and medium term medicare advantage the private plan option available under medicare and the state level individual insurance markets

innovation behaviour and regional indigenous potential meyer krahmer f 1985 innovation behaviour and regional indigenous potential reg studies 19 523 534 this paper has been written in order to present empirical results about some hypotheses not yet very well clarified in innovation oriented regional research the first part relates to one of the assumptions underlying innovation oriented regional policy which is that innovating and non innovating firms have different characteristics with respect to employment product lines and markets in particular the contribution to regional growth made by innovating firms is said to be larger in the second part of the paper the results of a study are presented in which it was attempted to find out empirically the extent of regional differences in indigenous innovation potential in the federal republic of germany reference is made to the innovating firms their performance and behaviour and bottlenecks in innovation as in other recent studies it is confirmed that there exists also in rural regions a sizeab

claim timing and ex post adverse selection many health care treatments are not urgent and may be delayed if patients so choose because insurance coverage is typically determined by the treatment date individuals may have incentives to strategically delay treatments to minimize out of pocket costs the strategic delay of treatment a particular form of moral hazard can be an important source of subsequent adverse selection in which ex ante identical individuals select insurance coverage based on their differing accumulation of previously delayed treatments this article investigates these forces empirically in the context of the missing market for dental insurance using rich claim level data my analysis reveals that approximately 40 of individuals strategically delay dental treatments when incentivized to do so and this flexibility in delaying treatment can explain why the market for dental insurance has largely unraveled more generally the counterfactual analysis suggests features such as open enrolment periods and contracting on pre existing conditions may be helpful tools in overcoming adverse selection in insurance contexts where the timing of uncertainty is not contractible

redistributive taxation in a simple perfect foresight model abstract we investigate the redistributive potential of capital taxation in an intertemporal maximizing model of capital formation first even unanticipated redistributive capital taxation is severely limited in its effectiveness since it depresses wages second under any convergent redistributive tax policy which maximizes a paretian social objective the capital income tax will converge to zero independent of the factor supply elasticities these results are independent of workers holdings of capital

an intertemporal general equilibrium model of asset prices this paper develops a continuous time general equilibrium model of a simple but complete economy and uses it to examine the behavior of asset prices in this model asset prices and their stochastic properties are determined endogenously one principal result is a partial differential equation which asset prices must satisfy the solution of this equation gives the equilibrium price of any asset in terms of the underlying real variables in the economy in this paper we develop a general equilibrium asset pricing model for use in applied research an important feature of the model is its integration of real and financial markets among other things the model endogenously determines the stochastic process followed by the equilibrium price of any financial asset and shows how this process depends on the underlying real variables the model is fully consistent with rational expectations and maximizing behavior on the part of all agents our framework is general enough to include many of the fundamental forces affecting asset markets yet it is tractable enough to be specialized easily to produce specific testable results furthermore the model can be extended in a number of straightforward ways consequently it is well suited to a wide variety of applications for example in a companion paper cox ingersoll and ross 7 we use the model to develop a theory of the term structure of interest rates many studies have been concerned with various aspects of asset pricing under uncertainty the most relevant to our work are the important papers on intertemporal asset pricing by merton 19 and lucas 16 working in a continuous time framework merton derives a relationship among the equilibrium expected rates of return on assets he shows that when investment opportunities are changing randomly over time this relationship will include effects which have no analogue in a static one period model lucas considers an economy with homogeneous individuals and a single consumption good which is produced by a number of processes the random output of these processes is exogenously determined and perishable assets are defined as claims to all or a part of the output of a process and the equilibrium determines the asset prices our theory draws on some elements of both of these papers like merton we formulate our model in continuous time and make full use of the analytical tractability that this affords the economic structure of our model is somewhat similar to that of lucas however we include both endogenous production and

advantageous selection in insurance markets this article reverses the standard conclusion that asymmetric information plus competition results in insufficient insurance provision risk tolerant individuals take few precautions and are disinclined to insure but they are drawn into a pooling equilibrium by the low premiums created by the presence of safer more risk averse types taxing insurance drives out the reckless clients allowing a strict pareto gain this result depends on administrative costs in processing claims and issuing policies as does the novel finding of a pure strategy partial pooling subgame perfect nash equilibrium in the insurance market copyright 2001 by the rand corporation

the industrial organization of health care markets the u s health care sector is large and growing health care spending in 2011 amounted to 2 7 trillion and 18 percent of gdp approximately half of health care output is allocated via markets in this paper we analyze the industrial organization literature on health care markets focusing on the impact of competition on price quality and treatment decisions for health care providers and health insurers we conclude with a discussion of research opportunities for industrial organization economists including opportunities created by the u s patient protection and affordable care act

health insurance and the demand for medical care evidence from a randomized experiment we estimate how cost sharing the portion of the bill the patient pays affects the demand for medical services the data come from a randomized experiment a catastrophic insurance plan reduces expenditures 31 percent relative to zero out of pocket price the price elasticity is approximately 0 2 we reject the hypothesis that less favorable coverage of outpatient services increases total expenditure for example by deterring preventive care or inducing hospitalization

taxation of asset income in the presence of a world securities market abstract this paper examines a capm model of world security prices in which governments recognize their ability to influence international security prices via their tax treatment of foreign and domestic investors in this model governments have the incentive to set tax rates such that investors tend to specialize in domestic securities and to restrict net capital flows between countries each country does this to increase the utility of domestic residents taking as given the tax policies of other governments but the net outcome is a reduction in world efficiency and likely a reduction in the utility of all investors

take up and targeting experimental evidence from snap this paper develops a framework for evaluating the welfare impact of various interventions designed to increase take up of social safety net programs in the presence of potential behavioral biases we calibrate the key parameters using a randomized field experiment in which 30 000 elderly individuals not enrolled in but likely eligible for the supplemental nutrition assistance program snap are either provided with information that they are likely eligible provided with this information and also offered assistance in applying or are in a status quo control group only 6 percent of the control group enrolls in snap over the next 9 months compared to 11 percent of the information only group and 18 percent of the information plus assistance group the individuals who apply or enroll in response to either intervention receive lower benefits and are less sick than the average enrollee in the control group the results are consistent with the existence of optimization frictions that are greater for needier individuals suggesting that the poor targeting properties of the interventions reduce their welfare gains

health insurance for humans information frictions plan choice and consumer welfare traditional models of insurance choice are predicated on fully informed and rational consumers protecting themselves from exposure to financial risk in practice choosing an insurance plan is a complicated decision often made without full information in this paper we combine new administrative data on health plan choices and claims with unique survey data on consumer information to identify risk preferences information frictions and hassle costs our additional friction measures are important predictors of choices and meaningfully impact risk preference estimates we study the implications of counterfactual insurance allocations to illustrate the importance of distinguishing between these micro foundations for welfare analysis

capital accumulation and uncertain lifetimes with adverse selection this paper examines the implications of adverse selection in the private annuity market for the pricing of private annuities and the consequent effects on constrption and bequest behavior with privately known heterogeneous mortality probabilities adverse selection causes the rate of return on private annuities to be less than the actuarially fair rate based on population average mortality however a fully funded social security system with compulsory participation can offer an implied rate of return equal to the actuarially fair rate based on population average mortality thus since social security offers a higher rate of return than private annuities consumers cannot completely offset the effects of social security by transacting in the private annuity market using an overlapping generations model with uncertain lifetimes we demonstrate that the introduction of actuarially fair social security reduces the steady state rate of return on annuities and raises the steady state levels of average bequests and average consumption of the young the steady state national capital stock rises or falls according to the strength of the bequest motive this abstract was borrowed from another version of this item

social insurance private health insurance and individual welfare abstract this paper studies the impact of social insurance on individual choices and welfare in a dynamic general equilibrium model with uncertain medical expenses and individual health insurance choices i find that social insurance modeled as the combination of a minimum consumption floor and the medicaid program does not only distort saving and labor supply decisions but also has a large crowding out effect on the demand for private health insurance however despite the distorting effects the net welfare consequence of eliminating social insurance is still negative in most cases in addition the large crowding out effect on private health insurance suggests that the existence of social insurance programs may be one reason why some americans do not buy any health insurance

nontraded assets in incomplete markets pricing and portfolio choice this paper examines portfolio choice and asset pricing when some assets are nontraded for instance when a country cannot trade claims to its output on world capital markets when a government cann

an empirical examination of information barriers to trade in insurance this paper uses direct evidence to evaluate whether asymmetric information is a barrier to trade in the largest market for private insurance in the world life insurance we report several findings that seem difficult to reconcile with the conventional theory of insurance under asymmetric information we conjecture that sellers may know their costs of production better than consumers in this market as in those for most other products

optimal mandates and the welfare cost of asymmetric information evidence from the u k annuity market much of the extensive empirical literature on insurance markets has focused on whether adverse selection can be detected once detected however there has been little attempt to quantify its welfare cost or to assess whether and what potential government interventions may reduce these costs to do so we develop a model of annuity contract choice and estimate it using data from the u k annuity market the model allows for private information about mortality risk as well as heterogeneity in preferences over different contract options we focus on the choice of length of guarantee among individuals who are required to buy annuities the results suggest that asymmetric information along the guarantee margin reduces welfare relative to a first best symmetric information benchmark by about 127 million per year or about 2 percent of annuitized wealth we also find that by requiring that individuals choose the longest guarantee period allowed mandates could achieve the first best allocation however we estimate that other mandated guarantee lengths would have detrimental effects on welfare since determining the optimal mandate is empirically difficult our findings suggest that achieving welfare gains through mandatory social insurance may be harder in practice than simple theory may suggest

constrained efficient equilibria in selection markets with continuous types abstract we prove the existence of the constrained efficient miyazaki 1977 wilson 1977 spence 1978 equilibrium in competitive markets with adverse selection when the distribution of unobservable types is continuous our existence proof applies under extremely general assumptions about individual preferences when we restrict preferences to have the widely used in the selection markets literature quasilinear form we characterize the properties of this equilibrium by developing a simple and computationally efficient numerical method for constructing it applying this method we show in a natural setting how one would compute the equilibrium allocation potentially facilitating empirical work using the mws equilibrium we illustrate this empirical application in the context of policy interventions and show that the welfare implications of a coverage mandate critically hinge on whether the market implements a constrained efficient allocation like the mws equilibrium or a constrained inefficient allocation like in azevedo and gottlieb 2017

what do economists know an empirical study of experts expectations for more than three decades economic columnist joseph a livingston has canvassed a panel of economists twice a year eliciting their six month and twelve month forecasts for more than a dozen key variables this study analyzes whether the experts predictions are unbiased and whether complete use was made of all relevant known information unbiasedness and completeness being necessary conditions for fully rational expectations little bias was found in either the half year or full year predictions but extensive underutilization of information particularly data on monetary growth occurred to prophecy is extremely difficult especially with respect to the future chinese proverb do economists expectations regarding key price and nonprice variables utilize all known relevant information in an unbiased efficient manner this is a worthy subject for research for several reasons properties of experts predictions likely form an upper bound for those of laymen further as john muth 14 has noted the character of dynamic processes is typically very sensitive to the way expectations are influenced by the actual course of events p 316 hence we need to know precisely how events do affect expectations finally the common practice of replacing a variable s generally unobserved expectation with a proxy based on its past values will be unbiased and will not cause bias in other

competitive insurance markets with two unobservables i study a screening game in a competitive insurance market in which insurance customers differ with respect to both accident probability and degree of risk aversion it is shown that indifference curves of customers may cross twice thus the single crossing property does not hold when differences in risk aversion are sufficiently large firms cannot use policy deductibles to screen high risk customers types may be pooled in equilibrium or are separated by raising premiums above actuarially fair levels this leads to excessive entry of firms in equilibrium

testing for asymmetric information in insurance markets the first goal of this paper is to provide a simple and general test of the presence of asymmetric information in contractual relationships within a competitive context we also argue that insurance data are particularly well suited to such empirical investigations to illustrate this claim we use data on contracts and accidents to investigate the extent of asymmetric information in the french market for automobile insurance using various parametric and nonparametric methods we find no evidence for the presence of asymmetric information in this market

choose to lose health plan choices from a menu with dominated option we examine the health plan choices that 23 894 employees at a u s firm made from a large menu of options that differed only in financial cost sharing and premium these decisions provide a clear test of the predictions of the standard economic model of insurance choice in the absence of choice frictions because plans were priced so that nearly every plan with a lower deductible was financially dominated by an otherwise identical plan with a high deductible we document that the majority of employees chose dominated plans which resulted in excess spending equivalent to 24 of chosen plan premiums low income employees were significantly more likely to choose dominated plans and most employees did not switch into more financially efficient plans in the subsequent year we show that the choice of dominated plans cannot be rationalized by standard risk preference or any expectations about health risk testing alternative explanations with a series of hypothetical choice experiments we find that the popularity of dominated plans was not primarily driven by the size and complexity of the plan menu nor informed preferences for avoiding high deductibles but by employees lack of understanding of health insurance our findings challenge the standard practice of inferring risk preferences from insurance choices and raise doubts about the welfare benefits of health reforms that expand consumer choice

does public insurance crowd out private insurance the cost of expanding public sector health programs depends critically on the extent to which public eligibility will cover just the uninsured or will crowd out existing private insurance coverage we estimate the extent of crowd out arising from the expansions of medicaid to pregnant women and children over the 1987 1992 period we estimate that approximately 50 percent of the increase in medicaid coverage was associated with a reduction in private insurance coverage this occurred largely because employees took up employer based insurance less frequently there is also some evidence that employers contributed less for insurance and that workers dropped coverage of dependents

do banks pass through credit expansions to consumers who want to borrow we examine the ability of policymakers to stimulate household spending during the great recession by reducing banks cost of funds using panel data on 8 5 million credit cards and 743 credit limit regression discontinuities we find that the one year marginal propensity to borrow mpb is declining in credit score falling from 59 for consumers with fico scores below 660 to essentially zero for consumers with fico scores above 740 we use the same credit limit discontinuities combined with a model of lending to estimate banks marginal propensity to lend mpl out of a decrease in their cost of funds for the lowest fico score consumers higher credit limits sharply reduce profits from lending limiting banks incentives to pass through credit expansions to these consumers we conclude that banks mpl is lowest for consumers with the highest mpb and discuss the implications for policies that aim to stimulate the economy through banks

health reform health insurance and selection estimating selection into health insurance using the massachusetts health reform approximately 49 9 million people in the united states lack health insurance denavas walt proctor and smith 2011 one potential driver of uninsurance is asymmetric information on health risk between insurers and the insured asymmetric information can distort available insurance contracts as in rothschild and stiglitz 1976 or it can raise premiums for the relatively healthy as in akerlof 1970 both distortions result in in efficiently low levels of insurance coverage predicated at least in part on concerns about adverse selection the state of massachusetts passed health reform in april 2006 aimed at achieving near universal health insurance coverage the massachusetts approach is considered a model for national health reform the patient protection and affordable care act ppaca signed in march 2010 a central feature of both reforms is a mandate that individuals obtain health insurance or pay a penalty the massachusetts mandate allows us to examine whether there was adverse selection into health insurance before the reform in contrast existing literature generally examines adverse selection among employer sponsored plans e g cutler and reber 1998 einav finkelstein and cullen 2010 which is less relevant for policy our simple empirical methodology is based on the observation that the direction of selection depends on the difference between the cost of the marginal enrollee and the cost of those who already have insurance if the cost of the marginal enrollee is below the average cost of those who are already insured selection is adverse if the cost of the marginal enrollee is above the average cost of those who are already insured selection is advantageous therefore as demonstrated by einav finkelstein and cullen 2010 the sign of the slope of the average cost curve captures selection we use the massachusetts reform to provide an exogenous shift in coverage that identifies the slope of the average cost curve we find that counties with larger increases in coverage over the reform period face the smallest increase in average hospital costs for the insured population consistent with adverse selection into insurance before reform additional results that incorporate cross state variation and data on health measures provide further evidence for adverse selection

who benefits when the government pays more pass through in the medicare advantage program abstract governments contract with private firms to provide a wide range of services while a large body of previous work has estimated the effects of that contracting surprisingly little has investigated how those effects vary with the generosity of the contract in this paper we examine this issue in the medicare advantage ma program through which the federal government contracts with private insurers to coordinate and finance health care for 17 million medicare recipients to do this we exploit a substantial policy induced increase in ma reimbursement in metropolitan areas with a population of 250 000 or more relative to msas below this threshold our results demonstrate that the additional reimbursement leads more private firms to enter this market and to an increase in the share of medicare recipients enrolled in ma plans our findings also reveal that about one eighth of the additional reimbursement is passed through to consumers in the form of better coverage a somewhat larger share accrues to private insurers in the form of higher profits and we find suggestive evidence of a large impact on advertising expenditures our results have implications for a key feature of the affordable care act that will reduce reimbursement to ma plans by 156 billion from 2013 to 2022

the effects of capital income taxation on international competitiveness and trade flows using an intertemporal equilibrium model this paper analyzes how lower source based taxes on capital income impact trade performance and international competitiveness it shows that depending on import shares and intertemporal and intratemporal substitution elasticities capital accumulation may induce changes in real interest rates and the terms of trade that stimulate domestic saving even if financial capital is perfectly mobile internationally import shares appear important determinants of exchange rate effects numerical simulations illustrate these results copyright 1989 by american economic association

ex post liability for harm vs ex ante safety regulation substitutes or complements this paper concerns the regulation of hazardous economic activities economists have generally viewed ex ante regulations safety standards pigouvian fees that regulate an activity before an accident occurs as substitutes for ex post policies exposure to tort liability for correcting extemalities this paper shows that where there is uncertainty there are inefficiencies associated with the exclusive use of negligence liability and that ex ante regulation can correct the inefficiencies in such a case it is efficient to set the safety standard below the level of precaution that would be called for if the standard were used alone jel 619

simulation of a health insurance market with adverse selection a health insurance market is examined in which individuals with a history of high utilization of health care services tend to select fee for service ffs insurance when offered a choice between ffs and health maintenance organizations hmos in addition hmos are assumed to practice community rating of employee groups based on these observations and health plan enrollment and premium data from minneapolis st paul a deterministic simulation model is constructed to predict equilibrium market shares and premiums for hmo and ffs insurers within a firm despite the fact that favorable selection enhances their ability to compete with ffs insurers the model predicts that hmos maximize profits at less than 100 market share and at a lower share than they could conceivably capture that is hmos would not find it to their advantage to drive ffs insurers from the market even if they could in all cases however the profit maximizing hmo premium is greater than the experience rated premium and thus the ave

space time patterns of entrepreneurial expectations and performance nijkamp p rouwendal j and van der ede m 1993 space time patterns of entrepreneurial expectations and performance reg studies 27 1 11 economic research in the past decade has paid much attention to the motives of entrepreneurial behaviour in a neo schumpeterian spirit entrepreneurial decisions are by definition characterized by uncertainty regarding future events rational expectations theories have become a major new line of thought in dealing with future uncertainty in the literature we find mainly attempts to estimate indirectly relationships on observable behaviour and strategies which are derived from postulated expectations of decision makers normally such expectations are not directly observed in our paper we have analysed a set of empirical regional micro data on entrepreneurial expectations regarding their future decisions whilst for the same period the observed and realized data are also available this allows for a test between expectations and realizations the paper develops

quantifying the premium externality of the uninsured in some insurance markets the uninsured can generate a negative externality on the insured leading insurance companies to pass on costs as higher premia using a novel panel data set and a staggered policy change that exogenously varied the rate of uninsured drivers at the county level in california we quantitatively investigate the effect of uninsured motorists on automobile insurance premia consistent with predictions of theory we find uninsured drivers lead to higher insurance premia specifically a 1 percentage point increase in the rate of uninsured drivers raises insurance premia by between 1 2 we also discuss corrective pigouvian taxes

false diagnoses pitfalls of testing for asymmetric information in insurance markets established tests for asymmetric information in insurance markets are examined the most commonly used that information is symmetric if high and low cover contracts have the same loss rate is inconsistent with standard assumptions that imply that under symmetric information all contracts o er full cover incomplete cover and symmetric information can be reconciled if there are claim processing costs but now existing tests fare badly partly due to the divergence between marginal and average selection effects ignoring the nature of loading factors may cause recent studies to mismeasure the welfare costs of asymmetric information but these problems are remedial

externalities in economies with imperfect information and incomplete markets this paper presents a simple general framework for analyzing externalities in economies with incomplete markets and imperfect infonnation by identifying the pecuniary effects of these externalities that net out the paper simplifies the problem of determining when tax interventions are pareto improving the approach indicates that such tax interventions almost always exist and that equilibria in situations of imperfect information are rarely constrained pareto optima it can also lead to simple tests based on readily observable indicators of the efficacy of particular tax policies in situations involving adverse selection signaling moral hazard incomplete contingent claims markets and queue rationing equilibria traditional discussions of externalities have emphasized the distinction between technological externalities in which the action of one individual or firm directly affects the utility or profit ofanother and pecuniary externalities in which one individual s or firm s actions affect another only through effects on prices while the presence of technological externalities imply in general that a competitive equilibrium may not be pareto efficient pecuniary externalities hy themselves are not a source of inefficiency the fact that prices change has of course important consequences there are both distributional and allocational effects but the distribution effects net out gains for example hy firms whose prices increase are precisely offset by losses e g to individuals who must pay higher prices and there are no welfare losses from the allocation effects as long as the price changes involved are small if firms are maximizing profits and individuals are maximizing utility both facing prices that correctly refiect opportunity costs then standard envelope theorem arguments imply that changes in profits or utility induced by changes in allocations resulting from any small change in prices are negligible

product design in selection markets insurers choose plan characteristics to sort for profitable consumers in a model with multidimensional types this sorting incentive is proportional to the covariance among marginal consumers between marginal willingness to pay and cost to the insurer standard forms of cost sharing successfully repel costly consumers but reducing plan comprehensiveness instead alienates the risk averse in a perfectly competitive equilibrium the sorting incentive must vanish market power increases insurance quality and welfare nonetheless a competitive equilibrium with positive insurance is possible when insurance value is suciently negatively correlated with cost however in a calibration to handel hendel and whinston 2013 s data equilibrium still fails to exist

the effects of rate regulation on demand for supplemental health insurance many developed countries have a market for private health insurance that supplements publicly funded universal coverage government regulation of the supplemental market including the extent to which insurers are permitted to adjust premiums based on individual characteristics such as age sex and health status varies across countries oecd 2004 proponents of rate regulation argue that the resulting crosssubsidization from low to high risks is necessary to maintain the affordability of coverage for high risks economic theory however raises the concern that the inability to adjust premiums to reflect individual risk could create adverse selection by driving low risks from the market michael rothschild and joseph stiglitz 1976 little empirical evidence exists to determine the optimal role of rate regulation in private supplemental insurance markets existing studies of the consequences of rating restrictions focus on markets for primary health insurance and find that these laws have had surprisingly little effect on overall rates of coverage simon 2004 in this paper we study the effects of rate regulation in supplemental health insurance markets by examining the market for individually purchased coverage that supplements medicare among the elderly in the united states while the publicly financed medicare program provides nearly universal coverage of a standard set of benefits for those 65 and over beneficiaries are exposed to significant financial risk due to the cost sharing associated with covered services and a lack of coverage for some important services the vast majority of medicare beneficiaries obtain supplemental coverage through a complex system of publicly and privately funded sources state medicaid programs provide publicly financed supplemental coverage for low income and disabled beneficiaries and employers provide highly subsidized retiree supplemental health insurance for other beneficiaries but the remainder rely on highly regulated private insurance markets medicare s part c managed care plans are a voluntary private replacement for traditional medicare while medigap coverage is a private policy bought by about 30 percent of medicare beneficiaries that provides only supplemental benefits franklin j eppig and george s chulis 1997 our study examines the effects of regulations limiting the information on individual characteristics insurers can use in setting premiums for medigap coverage

are risk preferences stable across contexts evidence from insurance data using a unique dataset we test whether households deductible choices in auto and home insurance reflect stable risk preferences our test relies on a structural model that assumes households are objective expected utility maximizers and claims are generated by household coverage specific poisson processes we find that the hypothesis of stable risk preferences is rejected by the data our analysis suggests that many households exhibit greater risk aversion in their home deductible choices than their auto deductible choices our results are robust to several alternative modeling assumptions jel d11 d83

adverse selection and inertia in health insurance markets when nudging hurts this paper investigates consumer inertia in health insurance markets where adverse selection is a potential concern we leverage a major change to insurance provision that occurred at a large firm to identify substantial inertia and develop and estimate a choice model that also quantifies risk preferences and ex ante health risk we use these estimates to study the impact of policies that nudge consumers toward better decisions by reducing inertia when aggregated these improved individual level choices substantially exacerbate adverse selection in our setting leading to an overall reduction in welfare that doubles the existing welfare loss from adverse selection jel d82 g22 i13 a number of potential impediments stand in the way of efficient health insur ance markets the most noted of these is adverse selection first studied by akerlof 1970 and rothschild and stiglitz 1976 in insurance markets prices reflect the expected risk costs of the insured pool whether the reason is price regulation or private information when insurers cannot price all risk characteristics riskier consumers choose more comprehensive health plans this causes the equilibrium prices of these plans to rise and healthier enrollees to select less comprehensive coverage than they would otherwise prefer

estimating risk preferences from deductible choice we develop a structural econometric model to estimate risk preferences from data on deductible choices in auto insurance contracts we account for adverse selection by modeling unobserved heterogeneity in both risk claim rate and risk aversion we find large and skewed heterogeneity in risk attitudes in addition women are more risk averse than men risk aversion exhibits a u shape with respect to age and proxies for income and wealth are positively associated with absolute risk aversion finally unobserved heterogeneity in risk aversion is greater than that of risk and as we illustrate has important implications for insurance pricing

adverse selection and an individual mandate when theory meets practice we develop a model of selection that incorporates a key element of recent health reforms an individual mandate using data from massachusetts we estimate the parameters of the model in the individual market for health insurance we find that premiums and average costs decreased significantly in response to the individual mandate we find an annual welfare gain of 4 1 per person or 51 1 million annually in massachusetts as a result of the reduction in adverse selection we also find smaller post reform markups

the deadweight gain of insurance taxation when risky activities are optional abstract some risky activities are optional for example motoring participation in them is most attractive for good risks creating a tendency for advantageous selection in the associated insurance market taxing insurance consequently yields deadweight gains when type is hidden results are strengthened if optimism is present finally endogenising participation implies that the standard positive correlation test for the presence of policy relevant asymmetric information may fail

selection in insurance markets theory and empirics in pictures government intervention in insurance markets is ubiquitous and the theoretical basis for such intervention based on classic work from the 1970s has been the problem of adverse selection over the last decade empirical work on selection in insurance markets has gained considerable momentum this research finds that adverse selection exists in some insurance markets but not in others and it has uncovered examples of markets that exhibit advantageous selection a phenomenon not considered by the original theory and one that has different consequences for equilibrium insurance allocation and optimal public policy than the classical case of adverse selection advantageous selection arises when the individuals who are willing to pay the most for insurance are those who are the most risk averse and so have the lowest expected cost indeed it is natural to think that in many instances individuals who value insurance more may also take action to lower their expected costs drive more carefully invest in preventive health care and so on researchers have taken steps toward estimating the welfare consequences of detected selection and of potential public policy interventions in this essay we present a graphical framework for analyzing both theoretical and empirical work on selection in insurance markets this graphical approach provides both a useful and intuitive depiction of the basic theory of selection and its implications for welfare and public policy as well as a lens through which one can understand the ideas and limitations of existing empirical work on this topic

imperfect risk adjustment risk preferences and sorting in competitive health insurance markets abstract i develop a model of insurer price setting and consumer welfare under risk adjustment a policy commonly used to combat inefficient sorting due to adverse selection in health insurance markets i use the model to illustrate graphically that risk adjustment causes health plan prices to be based on costs not predicted by the risk adjustment model residual costs rather than total costs either weakening or exacerbating selection problems depending on the correlation between demand and costs predicted by the risk adjustment model i then use a structural model to estimate the welfare consequences of risk adjustment finding a welfare gain of over 600 per person year

preference heterogeneity and insurance markets explaining a puzzle of insurance the textbook approach to insurance markets emphasizes the role of private information about risk in determining who purchases insurance in the classic adverse selection model of michael rothschild and joseph stiglitz 1976 individu als with higher expected claims buy more insur ance than those with lower expected claims who may be out of the market entirely this basic prediction of asymmetric information models of a positive correlation between insurance cov erage and accident occurrence has been shown to be robust to a variety of extensions to the stan

insurance as a lemons market coverage denials and pooling abstract the standard monopoly insurance model with adverse selection implies that there are always gains to trade that only the best unobservable risks can go uninsured and that a profit maximizing menu cannot pool all types we show that insurance provision costs can explain both coverage denials only to those likely to be the worst risks and complete pooling specifically we prove a general comparative statics theorem formalizing coverage denials only to those deemed to be the worst risks and two theorems showing that the insurer offers a single contract complete pooling with either zero or positive coverage we point out some implications of these results for empirical work on insurance our results expand upon a point made by hendren 2013 that the main effect of adverse selection on insurance might not be misallocation in active markets the traditional emphasis after rothschild and stiglitz 1976 but simply in shutting down markets as in akerlof 1970 classic lemons model

did community rating induce an adverse selection death spiral evidence from new york pennsylvania and connecticut using data from the 1987 to 1996 march current population surveys we find no evidence for the dire predictions of some that the imposition of pure community rating leads to a market wide reduction in insurance coverage by setting off an adverse selection death spiral specifically the percentage of individuals in small groups covered by health insurance did not fall in new york which enacted community rating legislation in 1993 relative to either pennsylvania which enacted no insurance reform or connecticut which enacted moderate insurance reforms without imposing community rating consistent with the predictions of the simple rothschild and stiglitz 1976 framework however we find that the new yorkreforms appear to have had a significant impact on the structure of the new yorkinsurance mark et specifically new yorkexperienced a dramatic shift away from indemnity insurance toward hmos while this shift tookplace during a period of nationwide increases in the percentage with managed care the increase in hmo penetration in new york s small group and individual markets was significantly greater than in pennsylvania or connecticut

capital income taxation in growing open economies abstract this paper studies how alternative capital mobility assumptions affect the incidence and efficiency of capital income taxation the study uses a two country intertemporal equilibrium model in which imperfectly elastic investment captures the notion of imperfectly mobile physical capital if home goods and foreign goods are perfect substitutes and investment is inelastic the tax effects in open and closed economies are similar only if physical capital is perfectly mobile are capital income taxes completely shifted in small open economies only then and if significant terms of trade effects are absent do open economy efficiency losses substantially exceed the closed economy losses

multiple dimensions of private information evidence from the long term care insurance market we demonstrate the existence of multiple dimensions of private information in the long term care insurance market two types of people purchase insurance individuals with private information that they are high risk and individuals with private information that they have strong taste for insurance ex post the former are higher risk than insurance companies expect while the latter are lower risk in aggregate those with more insurance are not higher risk our results demonstrate that insurance markets may suffer from asymmetric information even absent a positive correlation between insurance coverage and risk occurrence the results also suggest a general test for asymmetric information

what does a deductible do the impact of cost sharing on health care prices quantities and spending dynamics measuring consumer responsiveness to medical care prices is a central issue in health economics and a key ingredient in the optimal design and regulation of health insurance markets we study consumer responsiveness to medical care prices leveraging a natural experiment that occurred at a large self insured firm which required all of its employees to switch from an insurance plan that provided free health care to a non linear high deductible plan the switch caused a spending reduction between 11 79 13 80 of total firm wide health spending we decompose this spending reduction into the components of i consumer price shopping ii quantity reductions and iii quantity substitutions finding that spending reductions are entirely due to outright reductions in quantity we find no evidence of consumers learning to price shop after two years in high deductible coverage consumers reduce quantities across the spectrum of health care services including potentially valuable care e g preventive services and potentially wasteful care e g imaging services we then leverage the unique data environment to study how consumers respond to the complex structure of the high deductible contract we find that consumers respond heavily to spot prices at the time of care and reduce their spending by 42 when under the deductible conditional on their true expected end of year shadow price and their prior year end of year marginal price in the first year post plan change 90 of all spending reductions occur in months that consumers began under the deductible with 49 of all reductions coming for the ex ante sickest half of consumers under the deductible despite the fact that these consumers have quite low shadow prices there is no evidence of learning to respond to the true shadow price in the second year post switch

mispriced equity regulated rates for auto insurance in massachusetts from the santa monica freeway to the new jersey turnpike drivers are unhappy about the cost of automobile insurance and are asking government to do something about it california voters approved proposition 103 in 1988 it requires that all rates be approved by the state insurance commissioner attempts to reduce rates by 20 percent and dramatically limits the criteria that can be used to rate drivers for premium purposes new jersey enacted an insurance reform law that seeks to charge insurers for a deficit burdened state underwriting pool and prohibits the use of age sex and marital status in rating drivers for premiums other states enacting or considering significant rate rollbacks or reform since 1988 include arizona florida michigan nevada and pennsylvania this article describes the current consequences of similar policies adopted in massachusetts more than a decade ago the experience suggests that recent moves by other states in the same direction will ultimately prove quite expensive as the proportion of high cost drivers increases and as insurers lose the incentive to write policies and control costs the trend away from insurance premiums based on expected cost also reduces incentive effects for drivers since insurance premiums provide a link between tort judgments and consumer decisions

moral hazard vs liquidity and optimal unemployment insurance this paper presents new evidence on why unemployment insurance ui benefits affect search behavior and develops a simple method of calculating the welfare gains from ui using this evidence i show that 60 percent of the increase in unemployment durations caused by ui benefits is due to a liquidity effect rather than distortions on marginal incentives to search moral hazard by combining two empirical strategies first i find that increases in benefits have much larger effects on durations for liquidity constrained households second lump sum severance payments increase durations substantially among constrained households i derive a formula for the optimal benefit level that depends only on the reduced form liquidity and moral hazard elasticities the formula implies that the optimal ui benefit level exceeds 50 percent of the wage the exact identification approach to welfare analysis proposed here yields robust optimal policy results because it does not require structural estimation of primitives

health insurance and mortality experimental evidence from taxpayer outreach we evaluate a randomized pilot study in which the irs sent informational letters to 3 9 million taxpayers who paid a tax penalty for lacking health insurance coverage under the affordable care act drawing on administrative data we study the effect of the intervention on taxpayers subsequent health insurance enrollment and mortality we find the intervention led to increased coverage in the two years following treatment and that this additional coverage reduced mortality among middle aged adults over the same time period our results provide the first experimental evidence that health insurance reduces mortality

estimating welfare in insurance markets using variation in prices we provide a graphical illustration of how standard consumer and producer theory can be used to quantify the welfare loss associated with inefficient pricing in insurance markets with selection we then show how this welfare loss can be estimated empirically using identifying variation in the price of insurance such variation together with quantity data allows us to estimate the demand for insurance the same variation together with cost data allows us to estimate how insurers costs vary as market participants endogenously respond to price the slope of this estimated cost curve provides a direct test for both the existence and the nature of selection and the combination of demand and cost curves can be used to estimate welfare we illustrate our approach by applying it to data on employerprovided health insurance from one specific company we detect adverse selection but estimate that the quantitative welfare implications associated with inefficient pricing in our particular application are small in both absolute and relative terms

the use of regression statistics to analyze imperfect pricing policies corrective taxes can solve many market failures but actual policies frequently deviate from the theoretical ideal because of administrative or political constraints we present a method to quantif

pricing regulation and imperfect competition on the massachusetts health insurance exchange abstract we analyze insurance pricing regulation under imperfect competition on the massachusetts health insurance exchange differential markups lead to price variation apart from cost variation coarse insurer pricing strategies identify consumer demand younger consumers are twice as price sensitive as older consumers older consumers thus face higher markups over costs modified community rating links prices for consumers differing in both costs and preferences and changes the marginal consumer firms face stricter regulations transfer resources from low cost to high cost consumers reduce firm profits and increase overall consumer surplus

the welfare cost of factor taxation in a perfect foresight model this paper examines the marginal efficiency cost of various factor taxes in a dynamic general equilibrium model the au thor solves for the excess burden of anticipated and unanticipated t emporary and permanent tax policies using a range of estimates for taste and technology parameters he finds excess burdens larger than those indicated by previous studies that use static models these exc ess burdens are sensitive to parameter values and timing however th e rankings of alternative tax policies turn out to be insensitive to structural parameter values copyright 1987 by university of chicago press

how did health care reform in massachusetts impact insurance premiums it is widely recognized that the 2006 massachusetts health reforms served as a blueprint for national reform under the 2010 affordable care act aca as such there is interest in using the massachusetts experience to understand how insurance premiums might change under the aca in this paper we analyze changes in private insurance premiums in massachusetts between 2002 and 2010 in contrast to earlier estimates from massachusetts cogan hubbard and kessler 2010 we find no statistical evidence of changes in group premiums by contrast we find large reductions in non group premiums in massachusetts relative to the rest of the u s

taxation and uncertainty while taxes may be certain u s tax policy has certainly not been furthermore intrinsic economic risk makes investment decisions risky therefore a serious examination of the effects of tax policy on dynamic economic behavior should consider both sources of uncertainty this paper presents a simple theoretical and computational model that can analyze both intrinsic risk and uncertain taxation furthermore it will be clear that these techniques will be useful for examining general problems of taxation and risk when studying the impact of past and or proposed tax changes one of two extreme assumptions are usually made either agents are perfectly aware of future tax policy a perfect foresight assumption or they always believe that no change will ever occur a myopic foresight assumption these two assumptions yield substantially different views of recent tax experience as alan auerbach and james hines 1987 demonstrate in a partial equilibrium context both are clearly wrong the myopic specification assumes that individuals believe at each point in time that the current tax law will surely continue forever even after they have been hit repeatedly with tax changes on the other hand it is absurd to think that in say 1977 a significant number of individuals perfectly knew the various tax changes that would occur during the following decade this paper analyzes a dynamic general equilibrium model wherein taxpayers understand the uncertainty in tax policy when making their deci