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Did the ACA's Guaranteed Issue Provision Cause Adverse Selection into Nongroup Insurance? Analysis using a Copula-Based Hurdle Model

Marra, G., Radice, R. ORCID: 0000-0002-6316-3961 and Zimmer, D. (2021). Did the ACA's Guaranteed Issue Provision Cause Adverse Selection into Nongroup Insurance? Analysis using a Copula-Based Hurdle Model. Health Economics,

Abstract

Prior to the ACA, insurance companies could charge higher premiums – or outright denying coverage – to people with preexisting health problems. But the ACA’s “guaranteed issue” pro-vision forbids such price discrimination and denials of coverage. This paper seeks to determine whether, after implementation of the ACA, nongroup private insurance plans, have experienced adverse selection. Our empirical approach employs a copula-based hurdle regression model, with dependence modeled as a function of dimensions along which adverse selection might oc-cur. Our main finding is that, after implementation of the ACA, nongroup insurance enrolees with preexisting health problems do not appear to exhibit adverse selection. This finding suggests that the ACA’s mandate that everyone acquire coverage might have attracted enough healthy enrollees to offset any adverse selection.

Publication Type: Article
Additional Information: This is the peer reviewed version of the following article: Did the ACA's Guaranteed Issue Provision Cause Adverse Selection into Nongroup Insurance? Analysis using a Copula-Based Hurdle Model, which will be published in final form in Health Economics (https://onlinelibrary.wiley.com/journal/10991050). This article may be used for non-commercial purposes in accordance with Wiley Terms and Conditions for Use of Self-Archived Versions.
Publisher Keywords: community rating; copula, regression spline; partial effects; mixed data; hurdle model
Subjects: H Social Sciences > HD Industries. Land use. Labor
H Social Sciences > HG Finance
K Law
Departments: Business School > Actuarial Science & Insurance
Date Deposited: 02 Jun 2021 08:23
URI: https://openaccess.city.ac.uk/id/eprint/26215
[img] Text - Accepted Version
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