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Consumer Response to a National Marketplace for Individual Health Insurance

Authors

  • Stephen T. Parente,

    1. Stephen T. Parente is at the Carlson School of Management, University of Minnesota. Roger Feldman, Jean Abraham, and Yi Xu are at the School of Public Health, University of Minnesota. The authors can be contacted via e-mail: sparente@umn.edu, feldm002@umn.edu, abrah042@umn.edu, and xuxxx211@umn.edu, respectively. This research was supported by Contract HP-07–024 from the Office of the Assistant Secretary of the Department of Health and Human Services (DHHS). The findings and opinions expressed in the article are solely those of the authors and do not represent DHHS policy.
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  • Roger Feldman,

    1. Stephen T. Parente is at the Carlson School of Management, University of Minnesota. Roger Feldman, Jean Abraham, and Yi Xu are at the School of Public Health, University of Minnesota. The authors can be contacted via e-mail: sparente@umn.edu, feldm002@umn.edu, abrah042@umn.edu, and xuxxx211@umn.edu, respectively. This research was supported by Contract HP-07–024 from the Office of the Assistant Secretary of the Department of Health and Human Services (DHHS). The findings and opinions expressed in the article are solely those of the authors and do not represent DHHS policy.
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  • Jean Abraham,

    1. Stephen T. Parente is at the Carlson School of Management, University of Minnesota. Roger Feldman, Jean Abraham, and Yi Xu are at the School of Public Health, University of Minnesota. The authors can be contacted via e-mail: sparente@umn.edu, feldm002@umn.edu, abrah042@umn.edu, and xuxxx211@umn.edu, respectively. This research was supported by Contract HP-07–024 from the Office of the Assistant Secretary of the Department of Health and Human Services (DHHS). The findings and opinions expressed in the article are solely those of the authors and do not represent DHHS policy.
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  • Yi Xu

    1. Stephen T. Parente is at the Carlson School of Management, University of Minnesota. Roger Feldman, Jean Abraham, and Yi Xu are at the School of Public Health, University of Minnesota. The authors can be contacted via e-mail: sparente@umn.edu, feldm002@umn.edu, abrah042@umn.edu, and xuxxx211@umn.edu, respectively. This research was supported by Contract HP-07–024 from the Office of the Assistant Secretary of the Department of Health and Human Services (DHHS). The findings and opinions expressed in the article are solely those of the authors and do not represent DHHS policy.
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Abstract

The objective of this analysis is to simulate the difference between national and state-specific individual insurance markets on take-up of individual health insurance. This simulation analysis was completed in three steps. First, we reviewed the literature to characterize the state-specific individual insurance markets with respect to state regulations and to identify the effect of those regulations on health insurance premiums. Second, we used empirical data to develop premium estimates for the simulation that reflect case-mix as well as state-specific differences in health care markets. Third, we used a revised version of the 2005 Medical Expenditure Panel Survey (MEPS) to complete a set of simulations to identify the impact of three different scenarios for national market development. (National market estimates are based on the simulation model with competition among all 50 states and moderate impact assumptions.) We find evidence of a significant opportunity to reduce the number of uninsured under a proposal to allow the purchase of health insurance across state lines. The best scenario to reduce the uninsured, numerically, is competition among all 50 states with one clear winner. The most pragmatic scenario, with a good impact, is one winner in each regional market.

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