Mortality Effects and Choice across Private Health Insurance Plans

Jason Abaluck, Mauricio Caceres Bravo, Amanda Starc

Research output: Contribution to journalArticlepeer-review

19 Scopus citations


Competition in health insurance markets may fail to improve health outcomes if consumers are not able to identify high-quality plans. We develop and apply a novel instrumental variables framework to quantify the variation in causal mortality effects across plans and measure how much consumers attend to this variation. We first document large differences in the observed mortality rates of Medicare Advantage plans in local markets. We then show that when plans with high mortality rates exit these markets, enrollees tend to switch to more typical plans and subsequently experience lower mortality. We derive and validate a novel "fallback condition"governing the subsequent choices of those affected by plan exits. When the fallback condition is satisfied, plan terminations can be used to estimate the relationship between observed plan mortality rates and causal mortality effects. Applying the framework, we find that mortality rates unbiasedly predict causal mortality effects. We then extend our framework to study other predictors of plan mortality effects and estimate consumer willingness to pay. Higher-spending plans tend to reduce enrollee mortality, but existing quality ratings are uncorrelated with plan mortality effects. Consumers place little weight on mortality effects when choosing plans. Good insurance plans dramatically reduce mortality, and redirecting consumers to such plans could improve beneficiary health.

Original languageEnglish (US)
Pages (from-to)1557-1610
Number of pages54
JournalQuarterly Journal of Economics
Issue number3
StatePublished - Aug 1 2021

ASJC Scopus subject areas

  • Economics and Econometrics


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