TY  - JOUR
AU  - Decarolis, Francesco
AU  - Guglielmo, Andrea
TI  - Insurers' Response to Selection Risk: Evidence from Medicare Enrollment Reforms
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 22876
PY  - 2016
Y2  - December 2016
DO  - 10.3386/w22876
UR  - http://www.nber.org/papers/w22876
L1  - http://www.nber.org/papers/w22876.pdf
N1  - Author contact info:
Francesco Decarolis
Bocconi University
Via Sarfatti 25
Milan, 20136
Italy
E-Mail: francesco.decarolis@unibocconi.it

Andrea Guglielmo
Analysis Group, Inc
Prudential Center Plaza III
111 Huntington Ave, B
Boston, MA 02199
E-Mail: aguglielmo@wisc.edu
AB  - 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.
ER  -