Pricing regulation and imperfect competition on the massachusetts health insurance exchange

Keith M Marzilli Ericson, Amanda Starc

Research output: Contribution to journalArticlepeer-review

26 Scopus citations

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.

Original languageEnglish (US)
Pages (from-to)667-682
Number of pages16
JournalReview of Economics and Statistics
Volume97
Issue number3
DOIs
StatePublished - Jul 1 2015

ASJC Scopus subject areas

  • Social Sciences (miscellaneous)
  • Economics and Econometrics

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