Health Plan Payment in U.S. Marketplaces: Regulated Competition with a Weak Mandate


Layton, Timothy, Ellen Montz, and Mark Shepard. 2018. “Health Plan Payment in U.S. Marketplaces: Regulated Competition with a Weak Mandate”. In Risk Adjustment, Risk Sharing and Premium Regulation in Health Insurance Markets, Elsevier.


The U.S. Marketplaces were introduced in 2014 as part of a reform of the U.S. individual health insurance market. While the individual market represents a small slice of the U.S. population, it has historically been the market segment with the lowest rates of take-up and greatest concerns about access to robust coverage. As part of the reform of the individual insurance market, the Marketplaces invoke many of the principles of regulated competition including (partial) community rating of premiums, mandated benefits, and risk adjustment transfers. While the Marketplaces initially appeared to be successful at increasing coverage and limiting premium growth, more recent outcomes have been less favorable and the stability of the Marketplaces is currently in question. In this chapter, we lay out in detail how the Marketplaces adopt the tools of regulated competition. We then discuss ways in which the Marketplace model deviates from the more conventional model and how those deviations may impact the eventual success or failure of these new markets.

NBER Working Paper

See also: Book Chapters
Last updated on 07/06/2021