Nicholas Pension Consultants
Nova 401(k) Associates
Compensation Strategies Group, Ltd.
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|Information Frictions and Adverse Selection: Policy Interventions in Health Insurance Markets|
National Bureau of Economic Research [NBER]
Nov. 30, 2015
"[R]ecent evidence suggests that many consumers have information frictions that lead to suboptimal health plan choices.... In this paper we develop a general framework to study insurance market equilibrium and evaluate policy interventions in the presence of choice frictions.... [The authors] find that friction-reducing policies exacerbate adverse selection, essentially leading to the market fully unraveling, and reduce welfare. Risk-adjustment transfers are complementary, substantially mitigating the negative impact of friction-reducing policies, but having little effect in their absence."
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