Modeling employer self-insurance decisions after the Affordable Care Act.

ABSTRACT:

Objective

To present a microsimulation model that addresses the methodological challenge of estimating the firm decision to self-insure.

Methodology

The model considers the risk that the firm bears when self-insuring and the opportunity to mitigate that risk by purchasing stop-loss insurance. The model makes use of a structural, utility maximization framework to account for numerous aspects of the firm decision, and a multinomial probit to reproduce the elasticity of the firm's demand for health insurance.

Findings and conclusions

Our simulations provide three important conclusions. First, they project significant increases in self-insurance rates among small firms--presumably induced by the desire to avoid ACA's rate-banding and risk adjustment regulations-only if ge

SUBMITTER: Cordova A 

PROVIDER: S-EPMC3626325 | biostudies-literature | 2013 Apr

REPOSITORIES: biostudies-literature