ugh

For an individual aged 50, earning $17,300, in Lexington KY in 2020, the premium tax credit would be:

$567.70

Assume there were two plans on Healthcare.gov: A bronze plan with monthly premiums of $200 per month (and high cost sharing, conditional on using the health care system). A gold plan with monthly premiums of $600 per month (and low cost sharing, conditional on using the health care system). Consider an equal contribution rule, similar to what Harvard had after its pricing reform. If (Ak=200,β=0.0), then using the terminology in Cutler and Reber (1998), what is POOP (measured on a monthly basis)?

400

Assume there were two plans on Healthcare.gov: A bronze plan with monthly premiums of $200 per month (and high cost sharing, conditional on using the health care system). A gold plan with monthly premiums of $600 per month (and low cost sharing, conditional on using the health care system). Consider an equal percentage rule, similar to what Harvard had prior to its pricing reform. If (Ak=0,β=0.8), then using the terminology in Cutler and Reber (1998), what is POOP (measured on a monthly basis)?

80

What does the blue stairstep in the figure represent?

Additional people moving to the HMO after premiums initially rise faster in the PPO

In this figure, the lower of the two red lines represents:

An equal percentage rule

In the figure below, as POOP initially increases from the change in Harvard's pricing rule (from equal percentage to equal contribution), the group between h' and where the green line touches the x-axis move from the PPO to the HMO. What happens to the average health status for those in the HMO, and those in the PPO?

Average health in the HMO gets worse, average health in the PPO gets worse

Assume there were two plans on Healthcare.gov: A bronze plan with monthly premiums of $200 per month (and high cost sharing, conditional on using the health care system). A gold plan with monthly premiums of $600 per month (and low cost sharing, conditional on using the health care system). Assume a young, healthy individual gets $300 per month of value out of the bronze plan, and $500 of value per month out of the gold plan. Assume a old, unhealthy individual gets $600 per month of value out of the bronze plan, and $1100 of value per month out of the gold plan. If an equal percentage rule was applied with parameters (Ak=0,β=0.8), which individuals would choose the gold plan?

Both groups

In this figure, the two red lines show:

Changes in the pricing rule

Table IV from Cutler & Reber (1998) shows enrollment dynamics. In the 1994-1995 sample, one of the columns represents the equivalent of the previous figure I -- people with health between h' and the green line on the x-axis -- switching plans. Which group represents that group?

First year PPO, Second year HMO

Assume there were two plans on Healthcare.gov: A bronze plan with monthly premiums of $200 per month (and high cost sharing, conditional on using the health care system). A gold plan with monthly premiums of $600 per month (and low cost sharing, conditional on using the health care system). Assume a young, healthy individual gets $100 per month of value out of the bronze plan, and $400 of value per month out of the gold plan. Assume a old, unhealthy individual gets $300 per month of value out of the bronze plan, and $750 of value per month out of the gold plan. If an equal contribution rule was applied with parameters (Ak=50,β=0.0), which plan would old, unhealthy individuals choose?

Gold plan

In Figure I, healthy people choose the ___ because ________.

HMO ; value of choice < Poop

In this figure, the higher of the two red lines represents:

In this figure, the higher of the two red lines represents:

For a person initially at the margin between the HMO and PPO (h=h') in the figure below, changing the pricing rule from equal percentage to equal contribution leads to:

Increase in Poop

Assume there were two plans on Healthcare.gov: A bronze plan with monthly premiums of $200 per month (and high cost sharing, conditional on using the health care system). A gold plan with monthly premiums of $600 per month (and low cost sharing, conditional on using the health care system). Assume a young, healthy individual gets $300 per month of value out of the bronze plan, and $500 of value per month out of the gold plan. Assume a old, unhealthy individual gets $600 per month of value out of the bronze plan, and $1100 of value per month out of the gold plan. If an equal percentage rule was applied with parameters (Ak=0,β=0.8), which individuals would choose the bronze plan?

Neither group

Assume there were two plans on Healthcare.gov: A bronze plan with monthly premiums of $200 per month (and high cost sharing, conditional on using the health care system). A gold plan with monthly premiums of $600 per month (and low cost sharing, conditional on using the health care system). Assume a young, healthy individual gets $100 per month of value out of the bronze plan, and $400 of value per month out of the gold plan. Assume a old, unhealthy individual gets $300 per month of value out of the bronze plan, and $750 of value per month out of the gold plan. If an equal contribution rule was applied with parameters (Ak=50,β=0.0), which plan would young, healthy individuals choose?

Neither plan

For a person in the very best health (h=0) in the figure below, changing the pricing rule from equal percentage to equal contribution leads to:

No change in Poop

Assume there were two plans on Healthcare.gov: A bronze plan with monthly premiums of $200 per month (and high cost sharing, conditional on using the health care system). A gold plan with monthly premiums of $600 per month (and low cost sharing, conditional on using the health care system). Assume a young, healthy individual gets $300 per month of value out of the bronze plan, and $500 of value per month out of the gold plan. Assume a old, unhealthy individual gets $600 per month of value out of the bronze plan, and $1100 of value per month out of the gold plan. If an equal contribution rule was applied with parameters (Ak=200,β=0.0), which individuals would choose the gold plan?

Old, unhealthy individuals only

In Figure I, unhealthy people choose the ___ because ________.

PPO ; value of choice > Poop

In the figure below, as POOP initially increases from the change in Harvard's pricing rule (from equal percentage to equal contribution), the group between h' and where the green line touches the x-axis move from the PPO to the HMO. Assuming there is a long tail of health expenses, where those in the worst health are in the PPO and extremely expensive, what happens to premiums in the HMO and PPO after the initial switch?

Premiums rise in both the PPO and HMO, but faster in the PPO

Consider this figure from Cutler & Reber (1998). On the x-axis, individuals from [h′,∞] are:

Relatively unhealthy

For a person initially at the margin between the HMO and PPO (h=h') in the figure below, changing the pricing rule from equal percentage to equal contribution means they:

Switch to the HMO

Which of the following best characterizes how the change in the pricing rule as illustrated in the figure affects the health insurance market.

The pricing change leads to a large shift to the HMO

In the figure below, as POOP initially increases from the change in Harvard's pricing rule from equal percentage to equal contribution, which group initially switches their health insurance choice?

Those between h' and where the green line touches the x-axis switch to the HMO

Assume there were two plans on Healthcare.gov: A bronze plan with monthly premiums of $200 per month (and high cost sharing, conditional on using the health care system). A gold plan with monthly premiums of $600 per month (and low cost sharing, conditional on using the health care system). Assume a young, healthy individual gets $300 per month of value out of the bronze plan, and $500 of value per month out of the gold plan. Assume a old, unhealthy individual gets $600 per month of value out of the bronze plan, and $1100 of value per month out of the gold plan. If an equal contribution rule was applied with parameters (Ak=200,β=0.0), which individuals would choose the bronze plan?

Young, healthy individuals only

Table IV from Cutler & Reber (1998) shows enrollment dynamics. In the 1994-1995 sample, one of the columns represents the equivalent of the previous figure I -- people with health between h' and the green line on the x-axis -- switching plans. How does the average age of the switchers compare to others? a. The switchers had a higher average age than those in the HMO b. The switchers had a lower average age than those in the HMO. c. The switchers had a higher average age than those in the PPO. d. The switchers had a lower average age than those in the PPO.

a&d a. The switchers had a higher average age than those in the HMO d. The switchers had a lower average age than those in the PPO.

The subsidies on Healthcare.gov most closely mimic a. An equal contribution rule b. An equal percentage rule

a. An equal contribution rule

In class, we discussed how subsidies are computed on HealthCare.gov. Which of the following factors matter for the subsidy -- known as the premium tax credit -- for an individual shopping on the exchange? a. Smoking status b. Income c. Premium of the highest gold plan d. Premium of the lowest bronze plan e. Premium of the 2nd lowest silver health plan f. Age

b&e b. Income e. Premium of the 2nd lowest silver health plan

Consider this figure from Cutler & Reber (1998). On the x-axis, individuals from [0, h'] are

relatively healthy