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CHAPTER 2. HEALTH PLAN CHOICE 73 varying characteristics such as the deductible and the level of coinsurance, but most dimensions are fixed. Employers typically offer four coverage tiers: employee only, employee plus spouse, employee plus children, and employee plus family. 8 The level of cost sharing varies across coverage tiers. The employers do not offer any health insurance plans beyond those offered by the intermediary. The insurers then provide bids for each of the selected plans, relying on information from the intermediary. In an employer’s first year with the intermediary, this information is just the distribution of employees by age and sex. In subsequent years, the insurers receive additional information on the health status of the workers, in the form of a risk score described below. The intermediary instructs the insurers to bid as if they were covering all workers within the firm. While the insurers provide bids for each tier, the bids for tiers other than employee-only are simply scaled from the employee-only bids by a constant that is very similar across employers and plans. After the bids are received, the employer sets the employee contribution for each plan and coverage tier. The employees then make their choices, and the plans are required to accept all employees who choose to enroll. The last step is a series of payments. For each employee that enrolls in a plan, the employer pays the intermediary the insurer’s bid. The intermediary passes these payments to the insurers, implementing transfers between insurers if there is variation in the health status of employees and dependents enrolled in the different plans. The intermediary uses a standard methodology for measuring enrollee health status, the RxGroup model developed by DxCG, Inc. The model produces risk scores based on a person’s age, sex, and health status, where health status is inferred from prior use of prescription drugs, reported by the insurers. 910 In order to persuade the 8Two firms define coverage tiers based on employee only, employee plus one dependent, and employee plus two or more dependents. 9In our analysis, we use the term “risk score” to refer to the DxCG prediction of an individual’s health expenditures relative to the mean of the much larger base sample on which DxCG calibrates their model. We note that our use of the term risk refers only to the level and not to the variance of the expected expenditure, although we might naturally expect a relationship between the two. 10DxCG uses an internally-developed algorithm to infer the presence and severity of chronic conditions from prescription drug use. The health expenditure model is estimated on a very large sample (1,000,000+) of people under 65 with private health insurance. Using the estimated model, the software predicts covered health expenditures for a given individual. A score of 1 corresponds to a
CHAPTER 2. HEALTH PLAN CHOICE 74 insurers to participate, the intermediary had to convince them they would be ade- quately compensated for any unfavorable selection they might experience. Because the risk score is crucial in this regard, the intermediary worked with the insurers to ensure that the risk scores reflected the underlying health status of enrollees rather than the methods used by the plans to manage utilization. For instance, one concern was that the integrated insurer might substitute low-priced drugs more aggressively, leading the algorithm to under-estimate the severity of chronic illness for its enrollees. Discussions between the intermediary and the plans along these lines led to a num- ber of minor adjustments in the risk scoring algorithm. Our discussions with the participants suggest that both the intermediary and the insurers had strong incen- tives to ensure that health status was measured accurately, and that it is reasonable to assume that the risk score accurately captures employee health status and is not contaminated by differences in the plans. In addition to prescription drug utilization, each insurer also provides the intermediary with the realized costs for each employer group. The network insurer reports average claims per member per month for enrollees covered by either of the insurer’s products. The integrated insurer reports similar information developed from an in- ternal cost accounting system. Neither insurer distinguishes between its plans when reporting this information. 2.3.2 Data and Descriptive Statistics Our data includes all of the information discussed above: the plan offerings and contribution policies of each employer, the risk scores and plan choices of employees and their dependents, and the bids and reported costs of each insurer. A primary strength of the data is that it includes both demand-side information on employees and their choice behavior and supply-side information on insurer costs and bids in a setting with two very different types of insurers. In addition, many of the employers we observe offer nearly identical plans but have different risk profiles and contribution policies which provides useful variation to identify demand and costs. mean prediction from the original estimation sample. See ? for more detail.
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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
Page 39 and 40: CHAPTER 1. BANKRUPTCY 22 homestead
Page 41 and 42: CHAPTER 1. BANKRUPTCY 24 log seizab
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Page 45 and 46: CHAPTER 1. BANKRUPTCY 28 to seizabl
Page 48 and 49: CHAPTER 1. BANKRUPTCY 31 CARA utili
Page 50 and 51: CHAPTER 1. BANKRUPTCY 33 Puzzle 3:
Page 52: CHAPTER 1. BANKRUPTCY 35 of income
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Page 59 and 60: Payments CHAPTER 1. BANKRUPTCY 42 $
Page 61 and 62: OOP payments CHAPTER 1. BANKRUPTCY
Page 63 and 64: ln(seizable sssets) CHAPTER 1. BANK
Page 65 and 66: 50 60 70 80 90 100 Insurance covera
Page 67 and 68: Pr(WTP > premium) CHAPTER 1. BANKRU
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Page 136 and 137: CHAPTER 3. MEDIGAP 119 be of intere
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CHAPTER 3. MEDIGAP 123 have benefit
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CHAPTER 3. MEDIGAP 128 We use boots
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CHAPTER 3. MEDIGAP 130 of costs and
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CHAPTER 3. MEDIGAP 132 policy that
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CHAPTER 3. MEDIGAP 134 3.6.2 Causal
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CHAPTER 3. MEDIGAP 136 3.6.3 Robust
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CHAPTER 3. MEDIGAP 138 calculated u
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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 169 It
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CHAPTER 4. YEAR-END SPENDING 172 To
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CHAPTER 4. YEAR-END SPENDING 175 0.
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CHAPTER 4. YEAR-END SPENDING 177 Th
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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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