Studies from Microsoft Corporation Update Current Data on Economic Policy (Price-linked Subsidies and Imperfect Competition In Health Insurance)

2020 AUG 27 (NewsRx) -- By a News Reporter-Staff News Editor at Insurance Daily News -- Research findings on Economics - Economic Policy are discussed in a new report. According to news reporting from Redmond, Washington, by NewsRx journalists, research stated, “Policymakers subsidizing health insurance often face uncertainty about future market prices. We study the implications of one policy response: linking subsidies to prices to target a given postsubsidy premium.”

Financial supporters for this research include Lab for Economic Applications and Policy (LEAP) at Harvard University, National Science Foundation Graduate Research Fellowship, National Institute on Aging via the National Bureau of Economic Research.

The news correspondents obtained a quote from the research from Microsoft Corporation, “We show that these price-linked subsidies weaken competition, raising prices for the government and/or consumers. However, price-linking also ties subsidies to health care cost shocks, which may be desirable. Evaluating this tradeoff empirically, using a model estimated with Massachusetts insurance exchange data, we find that price-linking increases prices 1-6 percent, and much more in less competitive markets.”

According to the news reporters, the research concluded: “For cost uncertainty reasonable in a mature market, these losses outweigh the benefits of price-linking.”

For more information on this research see: Price-linked Subsidies and Imperfect Competition In Health Insurance. American Economic Journal Economic Policy, 2020;12(3):279-311. American Economic Journal Economic Policy can be contacted at: Amer Economic Assoc, 2014 Broadway, Ste 305, Nashville, TN 37203, USA.

Our news journalists report that additional information may be obtained by contacting Sonia Jaffe, Microsoft Corporation, One Microsoft Way, Redmond, WA 98052, United States.

The direct object identifier (DOI) for that additional information is: https://doi.org/10.1257/pol.20180198. This DOI is a link to an online electronic document that is either free or for purchase, and can be your direct source for a journal article and its citation.

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