Insurers' Response to Selection Risk: Evidence from Medicare Enrollment Reforms

Francesco Decarolis, Andrea Guglielmo

NBER Working Paper No. 22876
Issued in December 2016, Revised in February 2017
NBER Program(s):Health Care, Health Economics, Industrial Organization, Public Economics

Evidence on insurers’ behavior in environments with both risk selection and market power is largely missing. We fill this gap by providing one of the first empirical accounts of how insurers adjust plan features when faced with potential changes in selection. Our strategy exploits a 2012 reform allowing Medicare enrollees to switch to 5-star contracts at anytime. This policy increased enrollment into 5-star contracts, but without risk selection worsening. Our findings show that this is due to 5-star plans lowering both premiums and generosity, thus becoming more appealing for most beneficiaries, but less so for those in worse health conditions.

You may purchase this paper on-line in .pdf format from ($5) for electronic delivery.

Access to NBER Papers

You are eligible for a free download if you are a subscriber, a corporate associate of the NBER, a journalist, an employee of the U.S. federal government with a ".GOV" domain name, or a resident of nearly any developing country or transition economy.

If you usually get free papers at work/university but do not at home, you can either connect to your work VPN or proxy (if any) or elect to have a link to the paper emailed to your work email address below. The email address must be connected to a subscribing college, university, or other subscribing institution. Gmail and other free email addresses will not have access.


The NBER Bulletin on Aging and Health provides summaries of publications like this.  You can sign up to receive the NBER Bulletin on Aging and Health by email.

Machine-readable bibliographic record - MARC, RIS, BibTeX

Document Object Identifier (DOI): 10.3386/w22876

Published: Francesco Decarolis & Andrea Guglielmo, 2017. "Insurers’ response to selection risk: Evidence from Medicare enrollment reforms," Journal of Health Economics, vol 56, pages 383-396.

Users who downloaded this paper also downloaded* these:
Gowrisankaran, Joiner, and Lin w22873 Does Health IT Adoption Lead to Better Information or Worse Incentives?
Decarolis, Spagnolo, and Pacini w22814 Past Performance and Procurement Outcomes
Stomberg w22912 Drug Shortages, Pricing, and Regulatory Activity
Decarolis, Polyakova, and Ryan w21298 The Welfare Effects of Supply-Side Regulations in Medicare Part D
Stiglitz w22837 The Theory of Credit and Macro-economic Stability
NBER Videos

National Bureau of Economic Research, 1050 Massachusetts Ave., Cambridge, MA 02138; 617-868-3900; email:

Contact Us