TY  - JOUR
AU  - Bundorf,M. Kate
AU  - Levin,Jonathan D.
AU  - Mahoney,Neale
TI  - Pricing and Welfare in Health Plan Choice
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 14153
PY  - 2008
Y2  - June 2008
UR  - http://www.nber.org/papers/w14153
L1  - http://www.nber.org/papers/w14153.pdf
N1  - Author contact info:
Kate Bundorf
Health Research and Policy
Stanford University
HRP T108
Stanford, CA 94305-5405
Tel: 650/725-0067
Fax: 650/725-6951
E-Mail: bundorf@stanford.edu

Jonathan D. Levin
Stanford University
Department of Economics
579 Serra Mall
Stanford, CA  94305-6072
Tel: 650/723-5962
E-Mail: jdlevin@stanford.edu

Neale Mahoney
579 Serra Mall
Stanford, CA 94305
Tel: (413) 575 6931
E-Mail: neale.mahoney@gmail.com
AB  - Prices in government and employer-sponsored health insurance markets only partially reflect insurers' expected costs of coverage for different enrollees. This can create inefficient distortions when consumers self-select into plans. We develop a simple model to study this problem and estimate it using new data on small employers. In the markets we observe, the welfare loss compared to the feasible efficient benchmark is around 2-11% of coverage costs. Three-quarters of this is due to restrictions on risk-rating employee contributions; the rest is due to inefficient contribution choices. Despite the inefficiency, we find substantial benefits from plan choice relative to single-insurer options.
ER  -