MIT System Dynamics Seminar | Approaches to Encouraging Health Exchange Participation

You are invited to attend the System Dynamics Seminar being held on Friday, April 26^th from 12:30-2:00pm EST in the Jay W. Forrester conference room, E62-450, or via Zoom: https://mit.zoom.us/j/94114971874 (Password: SDSP24). Our guest speaker will be Soheil Ghili (Yale University) presenting Approaches to Encouraging Health Insurance Takeup (see abstract and brief bio below; announcement and paper attached). Lunch will be provided to those attending in person and a reminder email will be sent out closer to the date.

If you would also like to schedule a 30-minute 1:1 meeting with him before or after the seminar, please fill out the following link by COB Friday, April 19^th and I will confirm times and location with a calendar invite: https://rallly.co/invite/zVH4Rg1mCMRB. Please notify me if you need to meet over Zoom instead.

Abstract

The effectiveness of inducements to participate in health insurance exchanges, be those inducements of the Affordable Care Act (ACA) or of the Republican proposals to replace the ACA mandate, are an empirical matter. We study participation and welfare under different policies. We depart from the fully rational model of insurance; this decision is motivated by the fact that, under ACA rules, millions remain uninsured despite the heavy premium subsidies, often declining almost free coverage. We estimate the role of different frictions to participation, such as: uncompensated care, myopia and distaste for complying with the ACA mandate. Given these frictions we solve the equilibrium in the exchanges under various government interventions: subsidies, pricing regulations, individual mandate penalties, and dynamically based penalties. We find that the main friction is myopia. Although subsidies are necessary for the market under current rules not to collapse, subsidies would not be necessary absent myopia. Contrary to previous findings risk pricing does quite well, aided by subsidies and uncompensated care. Barring those, risk pricing would deliver very low welfare, due to reclassification risk.

Soheil Ghili is an assistant professor of Marketing at Yale School of Management. His main research interests are industrial organization and quantitative marketing. His recent research has examined optimal pricing strategies, with a focus on second-degree price discrimination mechanisms such as nonlinear pricing and product bundling. Methodologically, I use a combination of econometrics, micro-economic theory, and experiment design.