Code for: Adverse Selection and Network Design Under Regulated Plan Prices: Evidence From Medicaid

Principal Investigator(s):  View help for Principal Investigator(s) Amanda R. Kreider, University of Pittsburgh; Timothy J. Layton, University of Virginia; Mark Shepard, Harvard University; Jacob Wallace, Yale University

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Project Citation: 

Kreider, Amanda R., Layton, Timothy J., Shepard, Mark, and Wallace, Jacob. Code for: Adverse Selection and Network Design Under Regulated Plan Prices: Evidence From Medicaid. Ann Arbor, MI: Inter-university Consortium for Political and Social Research [distributor], 2025-04-07. https://doi.org/10.3886/E225887V1

Project Description

Summary:  View help for Summary Health plans for the poor increasingly limit access to specialty hospitals. We investigate the role of adverse selection in generating this equilibrium among private plans in Medicaid. Studying a network change, we find that covering a top cancer hospital causes severe adverse selection, increasing demand for a plan by 50% among enrollees with cancer versus no impact for others. Medicaid’s fixed insurer payments make offsetting this selection, and the contract distortions it induces, challenging, requiring either infeasibly high payment rates or near-perfect risk adjustment. By contrast, a small explicit bonus for covering the hospital is sufficient to make coverage profitable.

Scope of Project

Subject Terms:  View help for Subject Terms Medicaid; adverse selection; cancer care; managed care; health economics; risk adjustment; provider networks
Geographic Coverage:  View help for Geographic Coverage New York, USA


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