Did Blue Cross and Blue Shield Suffer from Adverse Selection? Evidence from the 1950s

Melissa A. Thomasson

NBER Working Paper No. 9167
Issued in September 2002
NBER Program(s):   DAE   HC

This paper uses a unique data set from 1957 to examine whether or not Blue Cross and Blue Shield suffered from an adverse selection death spiral after for-profit commercial insurance companies entered the market for health insurance. Results suggest that moving to experience rating may have helped the Blues counteract adverse selection in the group health insurance market. Adverse selection posed a greater problem for the Blues in the market for individual health insurance, possibly because of differences in the way the Blues screened potential enrollees relative to commercial insurance companies.

(236 K)

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Published: Thomasson, Melissa A. "Early Evidence Of An Adverse Selection Death Spiral? The Case Of Blue Cross And Blue Shield," Explorations in Economic History, 2004, v41(4,Oct), 313-328.

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