Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/185087 
Year of Publication: 
2018
Series/Report no.: 
IZA Discussion Papers No. 11627
Publisher: 
Institute of Labor Economics (IZA), Bonn
Abstract: 
States with Section 1332 Waivers to operate high-risk pools (HRPs) or reinsurance programs can receive federal pass through funds equal to reductions in federal expenditures generated by the Waiver. Shifting financial responsibility for high-cost individuals out of the Health Insurance Exchange (HIX) markets is expected to reduce federal expenditures for Advanced Premium Tax Credits, by reducing HIX plan premiums. Simulation models predict that a new HRP or reinsurance program would trigger premium reductions ranging from 7% to 23%. These models assume that insurers do not adjust plan cost-sharing requirements or plan generosity. However, federal requirements specifying the Medical Loss Ratio and plan Actuarial Values give insurers incentives to make multidimensional adjustments. We use plan level fixed effects to generate difference-in-difference estimates of insurer responses to closures of state-operated HRPs during 2014-2016. Silver plan premiums increased 7.7%, deductibles increased 41%, and Maximum-Out-Of-Pocket (MOOPs) expenditures increased 24% following closure of a state HRP.
Subjects: 
high risk pools
insurance premium
health insurance exchanges
cost-sharing
JEL: 
I11
I13
I18
Document Type: 
Working Paper

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