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Charles Yang, Florida Atlantic University; Jason Yeh, The Chinese University of Hong Kong; Derrick Fung, The Hang Seng University of Hong Kong; Joshua Frederick, Ball State University
To help enhancing affordability and availability in the U.S. individual health insurance markets, we evaluate whether expanding interstate markets is associated with efficiency improvement, and the potentials of “Medicaid for All” and “Medicare for All”. We employ traditional, non-oriented slack-based, order-α partial frontier, bootstrapped bias-corrected, and modified context-dependent data envelopment analysis (DEA) models, as well as generalized linear, Tobit, and residual inclusion regression models. We find that higher competition or expansion is not associated with higher consumer efficiency or societal efficiency. Our results also indicate that, in minimizing premiums or expenses given enrollment and utilization of medical services, individual health plans are less efficient than Medicaid managed care plans, but more efficient than Medicare Advantage plans. Our findings imply that, for individual plans, expanding interstate markets is not accompanied with lower premiums or expenses without the sacrifice of medical services. This research suggests that it should be advisable to structure individual health insurance markets following the Medicaid model but not the Medicare model. To “Medicaid-size” individual markets, we propose to structure the individual coverage in two layers: a conditionally subsidized Medicaid managed care program with mandatory essential benefits, and an unsubsidized “Medicaid Supplement” program for optional additional coverages.
