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CHAPTER 2. HEALTH PLAN CHOICE 91 As the figures illustrate, the plans seem to have similar costs for enrollees with average health risk and divergent costs for enrollees in good and poor health. The expected monthly cost for an enrollee with a risk score of 1 is $235 for the integrated HMO, $236 for the integrated POS, $218 for the network HMO, and $238 for the network PPO. For less healthy enrollees, the integrated insurer has a substantial cost advantage. The expected monthly cost of an enrollee with a risk score of two is $309 for the integrated HMO, compared to $507 for the network HMO and $413 for the network PPO. Network plans do relatively well for low risks. The expected monthly cost for an enrollee with a risk score of 0.5 is $198 for the integrated HMO, as opposed to $151 for the network PPO and $74 for the network HMO. The structure of plan costs we estimate is consistent with the basic idea that patient cost sharing may be effective at limiting provider visits while supply-side mechanisms may be more effective at limiting costs conditional on receiving services (see, e.g., ?). While we do not have visit-level data to support the claim, the steep cost curves for the network plans are consistent with cost sharing limiting visits, particularly for low risks, but having little effect on the high risks who consume healthcare on the intensive margin. In contrast, the integrated plans with their relatively low cost sharing but stronger supply side utilization controls may be less effective at limiting provider visits for low risks but more effective at managing costs conditional on provider visits for the high risks. Another factor explaining the relatively high costs for low risks in the integrated plan may be the greater use of preventive services. These results also provide some insight on the potential issue of bias in the risk scores. As discussed earlier, if the risk scores are biased, the likely direction of the bias is an underestimate of the risk of the enrollees in the integrated plan. This is because the risk scores are based on the types of prescription drugs used by plan enrollees and the integrated plan more aggressively manages drug utilization. If this were the case, then we would underestimate the cost savings for high risks generated by the integrated plan. In other words, the large cost differentials we observe would be even larger. While we believe that bias in the risk scores is unlikely to be an important issue, if it exists, it would likely reinforce our key findings. We note that our estimates for the integrated POS plan indicate that its costs
CHAPTER 2. HEALTH PLAN CHOICE 92 are more similar to those of the network plans than the integrated HMO. While these results are not consistent with our findings regarding the differences in the cost structures between the two types of insurers, since the bulk of the integrated plans enrollment is concentrated in the HMO product, it is likely that the HMO is more representative of its cost structure, particularly given our small sample size. The other inconsistency in our cost results is the difference in the cost structure between the plans offered by the network insurer. In particular, in contrast to the integrated HMO, the network HMO appears not to generate cost savings for high risks relative to the PPO product. While it is difficult to understand why this plan would be more expensive for unhealthy enrollees relative to its less managed PPO counterpart, we note that our estimates are based on relatively small samples, making it not particularly surprising that some of our results may not have an intuitive explanation. In addition, many factors are likely to affect health plans costs so our estimates may also reflect true differences in cost structures for which we did not have strong prior beliefs. The estimated mark-up varies across insurers. We estimate that the network insurer and the integrated insurer bid 24 percent and 8 percent over expected costs, respectively. The sensitivity of cost differentials as a function of enrollee risk, compared to the relatively modest effect of risk on plan preferences, has an important implication. It indicates that as consumer risk varies, changes in relative plan costs rather than changes in preferences will drive the efficient allocation. As our simple theory model illustrated, this will not happen under self-selection without a mechanism that allows different risk groups to face different premium differentials. In our setting, prices do not have this feature, suggesting the potential for inefficiency. We return to this point in the next section, when we quantify social welfare. A factor to keep in mind when evaluating our estimates of plan costs is that we observe the insurers’ costs of coverage, not the overall dollars spent on care. The distinction is important because, in plans with copayments and deductibles, enrollees bear a share of the cost of care that we do not capture in our data. These payments are largest at the network PPO and smallest at the integrated HMO. While our model assumes that these payments will be internalized in making plan choices, they
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ESSAYS IN PUBLIC FINANCE AND INDUST
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I certify that I have read this dis
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insurance choice. Among other thing
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Acknowledgements I am deeply thankf
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Contents Preface iv Acknowledgement
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2.5.3 The Value of Plan Choice ....
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List of Tables 1.1 Asset Exemption
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4.9 First Week Contract Spending fo
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4.3 I.T. Contracting by Week ......
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CHAPTER 1. BANKRUPTCY 2 of the dead
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CHAPTER 1. BANKRUPTCY 4 relevant le
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CHAPTER 1. BANKRUPTCY 6 superficial
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CHAPTER 1. BANKRUPTCY 8 After treat
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CHAPTER 1. BANKRUPTCY 12 newly edit
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CHAPTER 1. BANKRUPTCY 15 bound of t
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CHAPTER 1. BANKRUPTCY 20 or coverag
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CHAPTER 1. BANKRUPTCY 22 homestead
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CHAPTER 1. BANKRUPTCY 24 log seizab
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CHAPTER 1. BANKRUPTCY 26 on the bas
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CHAPTER 1. BANKRUPTCY 28 to seizabl
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CHAPTER 1. BANKRUPTCY 31 CARA utili
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CHAPTER 1. BANKRUPTCY 33 Puzzle 3:
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CHAPTER 1. BANKRUPTCY 35 of income
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Page 59 and 60: Payments CHAPTER 1. BANKRUPTCY 42 $
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Page 136 and 137: CHAPTER 3. MEDIGAP 119 be of intere
Page 138 and 139: CHAPTER 3. MEDIGAP 121 hazard for i
Page 140 and 141: CHAPTER 3. MEDIGAP 123 have benefit
Page 145 and 146: CHAPTER 3. MEDIGAP 128 We use boots
Page 147 and 148: CHAPTER 3. MEDIGAP 130 of costs and
Page 149 and 150: CHAPTER 3. MEDIGAP 132 policy that
Page 151 and 152: CHAPTER 3. MEDIGAP 134 3.6.2 Causal
Page 153 and 154: CHAPTER 3. MEDIGAP 136 3.6.3 Robust
Page 155 and 156: CHAPTER 3. MEDIGAP 138 calculated u
Page 157 and 158: CHAPTER 3. MEDIGAP 140 (10000,11000
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CHAPTER 3. MEDIGAP 142 Table 3.2: S
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CHAPTER 3. MEDIGAP 144 Table 3.4: H
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CHAPTER 3. MEDIGAP 146 Table 3.6: S
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CHAPTER 3. MEDIGAP 148 Table 3.8: R
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CHAPTER 3. MEDIGAP 150 Table 3.10:
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CHAPTER 3. MEDIGAP 152 Table 3.12:
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CHAPTER 4. YEAR-END SPENDING 154 bu
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CHAPTER 4. YEAR-END SPENDING 156 in
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CHAPTER 4. YEAR-END SPENDING 159 To
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CHAPTER 4. YEAR-END SPENDING 163 4.
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CHAPTER 4. YEAR-END SPENDING 165 or
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CHAPTER 4. YEAR-END SPENDING 167 ha
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CHAPTER 4. YEAR-END SPENDING 172 To
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CHAPTER 4. YEAR-END SPENDING 179 to
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CHAPTER 4. YEAR-END SPENDING 183 Fi
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CHAPTER 4. YEAR-END SPENDING 187 Ta
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