Mortality Effects and Choice Across Private Health Insurance Plans

Area of Science:

• Health Economics
• Health Services Research
• Biostatistics

Background:

• Health insurance market competition may not improve outcomes if consumers cannot discern plan quality.
• Identifying high-quality health insurance plans is crucial for consumer well-being and market efficiency.

Purpose of the Study:

• To quantify the variation in causal mortality effects across Medicare Advantage plans.
• To assess consumer attention to plan-specific mortality variations.
• To evaluate the predictive power of observed mortality rates for actual causal effects.

Main Methods:

• Developed a novel instrumental variables framework to estimate causal mortality effects.
• Analyzed plan exits and enrollee switching behavior to infer consumer choices.
• Derived and validated a "fallback condition" for estimating plan quality.

Main Results:

• Observed mortality rates strongly and unbiasedly predict causal mortality effects across Medicare Advantage plans.
• Higher spending plans are associated with reduced enrollee mortality.
• Existing quality ratings do not correlate with actual plan mortality effects.

Conclusions:

• Medicare Advantage plan mortality rates are reliable indicators of plan quality.
• Consumers place minimal weight on mortality effects when selecting plans.
• Redirecting beneficiaries to high-quality plans could significantly improve health outcomes.