Horizon effects and adverse selection in health insurance markets
Bibliographic record
Abstract
Abstract This paper highlights the idea that increasing the length of insurance contracts can reduce adverse selection in health insurance markets while preserving community rating. Private health insurance contracts in the United States have short, one‐year terms, even though health risks may be serially correlated. Intuitively, because risk is mean‐reverting, longer contracts allow for pooling of risk within individuals over time, as opposed to just across individuals with traditional short‐term contracts. In equilibrium, such horizon effects lead to lower premiums and greater coverage. The mechanism depends on two key conditions. First, the pooling of risk within individuals is the greatest when mean reversion in risk is intermediate. Second, two‐sided commitment is present to preserve community rating. Counterfactual analysis using administrative claims data illustrates that a simple reform that implements two‐year instead of one‐year contracts could increase equilibrium coverage and yield non‐trivial welfare gains on net, in spite of restricting consumer choice.
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How this classification was reachedexpand
Full frame machine prediction
Teacher imitationNot calibrated prevalence, not ground truth. Human validation pending. The Gemma side is a direct model label for every work in the frame, read from the title-only record. The Codex side is a classifier learned from the 10,348 direct Codex labels and calibrated to design-weighted sample rates; fields without enough sample support carry no Codex call. Candidate is the union of the two sides; consensus is their intersection. These outputs are machine_predicted_unvalidated and are not human labels.
Distilled classifier scores by category (both heads)
| Category | Codex | Gemma |
|---|---|---|
| Metaresearch | 0.009 | 0.025 |
| Meta-epidemiology (narrow) | 0.000 | 0.000 |
| Meta-epidemiology (broad) | 0.001 | 0.001 |
| Bibliometrics | 0.001 | 0.001 |
| Science and technology studies | 0.001 | 0.003 |
| Scholarly communication | 0.003 | 0.004 |
| Open science | 0.001 | 0.002 |
| Research integrity | 0.002 | 0.002 |
| Insufficient payload (model declined to judge) | 0.016 | 0.000 |
Machine scores (provisional)
The two teacher heads of the student model, read on this work. A score orders the frame for review; it never asserts a category, and the validation status ships verbatim with every row.
Baseline scores from an immature model (maturity gate not passed, 7 training rounds). Scores rank; they never assert a category.
score_only:v0-immature-baseline · verbatim from the scoring run: score_only means the number may rank works, and no category label ships from itClassification
machine, unvalidatedMachine predicted; a candidate call from one source (direct Gemma or distilled Codex), not a consensus.
How this classification was reached, model by model and score by score, is at the end of the page under "How this classification was reached".