Replication data for: Advertising and Risk Selection in Health Insurance Markets

Principal Investigator(s): View help for Principal Investigator(s) Naoki Aizawa; You Suk Kim

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Project Description

Summary: This paper studies the impact of advertising as a channel for risk selection in Medicare Advantage. We provide evidence that insurer advertising is responsive to the gains from risk selection. Then we develop and estimate an equilibrium model of Medicare Advantage with advertising, allowing rich individual heterogeneity. Our estimates show that advertising is effective in attracting healthy individuals who are newly eligible for Medicare, contributing to advantageous selection into Medicare Advantage. Moreover, risk selection through advertising substantially lowers premiums by improving insurers' risk pools. The distributional implication is that unhealthy consumers may be better off through cross-subsidization from healthy individuals.

Scope of Project

JEL Classification:
      D81 Criteria for Decision-Making under Risk and Uncertainty
      G22 Insurance; Insurance Companies; Actuarial Studies
      I13 Health Insurance, Public and Private
      I18 Health: Government Policy; Regulation; Public Health
      M37 Advertising

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V1 [2019-10-12]

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