How do insurance firms respond to financial risk sharing regulations? Evidence from the Affordable Care Act.

Many insurance markets have reinstated premium stabilization programs to ensure financial protection from market volatility. In this paper, we focus on one such regulation-risk corridors (RCs)-in the context of the Health Insurance Marketplaces established under the Affordable Care Act. We develop a...

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Detalles Bibliográficos
Publicado en:	Health Economics Vol. 30; no. 6; pp. 1443 - 1461
Autores principales:	Sacks, Daniel W., Vu, Khoa, Huang, Tsan‐Yao, Karaca‐Mandic, Pinar, Huang, Tsan-Yao, Karaca-Mandic, Pinar
Formato:	Journal Article
Publicado:	Wiley-Blackwell Jun2021
Acceso en línea:	Ver este registro en EBSCOhost

Descripción
Sumario:	Many insurance markets have reinstated premium stabilization programs to ensure financial protection from market volatility. In this paper, we focus on one such regulation-risk corridors (RCs)-in the context of the Health Insurance Marketplaces established under the Affordable Care Act. We develop a model to show how the program provided incentives for some insurers to lower their premiums. The RCs program was defunded unexpectedly for coverage year 2016, before its legislated end in 2016. Consistent with the model, we find that making a RCs claim before the program ended is associated with higher premium growth after the program's demise. The model and empirical evidence are consistent with the view that the end of the RCs program contributed to premium growth in the Marketplaces.