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Should There Be Vertical Choice in Health Insurance Markets?
National Bureau of Economic Research [NBER]; purchase required for full document Link to more items from this source
May 10, 2021

"When premiums cannot reflect individual costs, consumers may not select their efficient coverage level. We show that vertical choice is efficient only if consumers with higher willingness to pay for insurance have a higher efficient level of coverage. Using administrative data from a large public employer, we investigate this condition empirically and find that the welfare gains from vertical choice are either zero or economically small."

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