@article {482941,
	title = {Are All Managed Care Plans Created Equal? Evidence from Random Plan Assignment in New York Medicaid Managed Care},
	journal = {NBER Working Paper 27762},
	year = {Working Paper},
	author = {Michael Geruso and Timothy J. Layton and Jacob Wallace}
}
@article {647458,
	title = {The Behavioral Foundations of Default Effects: Theory and Evidence from Medicare Part D},
	year = {Working Paper},
	abstract = {We leverage two unique natural experiments to show that, in public drug insurance for the low-income elderly in the U.S., defaults have large and persistent effects on plan enrollment and beneficiary drug utilization. We estimate that when a beneficiary{\textquoteright}s default is exogenously changed from one year to the next, 96\% of beneficiaries follow that default. We then develop a general framework for choice under costly cognition that allows for the possibility that either paternalistic defaults that steer consumers to plans that suit them (Thaler and Sunstein 2008) or {\textquoteleft}shocking{\textquoteright} defaults that trigger consumers to make active choices (Carroll et al. 2009) could be optimal. We show that optimal default design depends on a previously-overlooked parameter: The elasticity of active choice propensity with respect to the value of the default. Leveraging variation in the match value of randomly-assigned default plans, we estimate an elasticity close to zero: There is little difference in the probability of active choice between beneficiaries assigned a well-matched default versus beneficiaries assigned a poorly-matched default. We also show that this passivity has real consequences, with beneficiaries assigned poorly-matched defaults experiencing large declines in drug consumption relative to those assigned well-matched defaults. This suggests that any potential welfare gains from an active choice response induced by a poorly-matched default are likely to be small and outweighed by the welfare losses due to reductions in drug consumption among beneficiaries who follow the poorly-matched default. Using a third natural experiment and a structural model of attention, we find that the little active choice that is present in this market appears to be largely random, with two-thirds of the variation in active choice coming from within-beneficiary transitory shocks to attention. Our results show that default rules are an integral part of insurance market design and that beneficiaries are likely to benefit from paternalistic defaults rather than be hurt by them.},
	url = {https://www.nber.org/papers/w28331},
	author = {Zarek Brot-Goldberg and Timothy Layton and Boris Vabson and Adelina Wang}
}
@article {632213,
	title = {Liquidity and Healthcare Consumption: Evidence from Social Security Payments},
	journal = {NBER Working Paper 27977. Conditionally accepted at American Economic Review: Insights.},
	year = {Working Paper},
	abstract = {Some consumers lack the cash needed to pay for medical care. As a result, they either delay care until they can pay for it or they forgo the care altogether. To test for such a possibility, we study the distribution of monthly Social Security checks among Medicare Part D enrollees. When Social Security checks are distributed, prescription fills increase by 6-12 percent. In that sense, drug consumption of low-income Medicare recipients is "liquidity sensitive." We then study recipients who transition onto a program that eliminates copayments. When those recipients do not face copayments, their drug consumption becomes less liquidity sensitive. That finding implies that, beyond risk protection, generous insurance also provides recipients with the ability to consume healthcare when they need it rather than when they have cash. Further, we find that recipients whose drug consumption is most liquidity sensitive exhibit price elasticities of demand that are twice the size of the average elasticity, suggesting that more-generous insurance causes recipients both to re-time prescription filling and also to start filling prescriptions that they otherwise would not fill. We present a stylized model that uses this finding to call into question the conventional interpretation of demand-response to price as solely inefficient moral hazard.},
	author = {Tal Gross and Timothy Layton and Daniel Prinz}
}
@article {575101,
	title = {Public vs. Private Provision of Social Insurance: Evidence from Medicaid},
	journal = {NBER Working Paper 26042. Revisions Requested at American Economic Journal: Economic Policy},
	year = {Working Paper},
	abstract = {Public health insurance benefits in the U.S. are increasingly provided by private firms. We assess the consequences of private provision by exploiting the staggered introduction of enrollment mandates across counties in Texas and New York, which required disabled Medicaid beneficiaries to shift to private health plans. In Texas, where the public program uses strict rationing to control costs, privatization led to higher Medicaid spending but also improvements in healthcare. In New York, where the public program is more generous, privatization did not affect Medicaid spending but resulted in a large decrease in inpatient admissions. We conclude that the consequences of private provision depend critically on the design of the public and private programs.\&nbsp;},
	author = {Timothy J. Layton and Nicole Maestas and Daniel Prinz and Boris Vabson}
}
@article {590921,
	title = {Adverse Selection and Access to High Quality Specialty Care under Privatized Social Insurance Programs: Evidence from New York Medicaid},
	year = {In Preparation},
	author = {Amanda Krieder and Timothy Layton and Mark Shepard and Jacob Wallace}
}
@article {647459,
	title = {Frictions vs. Premiums Impeding Take-up of Subsidized Health Insurance Coverage: Evidence from a Field Experiment},
	year = {In Preparation},
	author = {Keith Ericson and Timothy Layton and Adrianna McIntyre and Adam Sacarny}
}
@article {632214,
	title = {Grading Medicaid: Fiscal Federalism and Social Insurance in the United States},
	year = {In Preparation},
	author = {Timothy Layton and Nicole Maestas and Daniel Prinz and Mark Shepard and Boris Vabson}
}
@article {590916,
	title = {The Two Margin Problem in Insurance Markets},
	journal = {Review of Economics and Statistics},
	year = {Forthcoming},
	url = {http://ssrn.com/abstract=3385492},
	author = {Michael Geruso and Timothy Layton and Grace McCormack and Mark Shepard}
}
@article {482921,
	title = {Upcoding: Evidence from Medicare on Squishy Risk Adjustment},
	journal = {Journal of Political Economy},
	volume = {128},
	number = {3},
	year = {2020},
	pages = {984-1026},
	abstract = {
	Upcoding{\textemdash}manipulation of patient diagnoses in order to game payment systems{\textemdash}has gained significant attention following the introduction of risk adjustment into US insurance markets. We provide new evidence that enrollees in private Medicare plans generate 6\% to 16\% higher diagnosis-based risk scores than they would generate under fee-for-service Medicare, where diagnoses do not affect payments. Our estimates imply upcoding generates billions of dollars in excess public spending annually and significant consumer choice distortions. We show that coding intensity increases with vertical integration, reflecting a principal-agent problem faced by insurers, who desire more intense coding from the physicians with whom they contract.

},
	url = {http://www.nber.org/papers/w21222},
	author = {Michael Geruso and Timothy J. Layton}
}
@article {632248,
	title = {Data transformations to improve the performance of health plan payment methods},
	journal = {Journal of Health Economics},
	volume = {66},
	number = {July},
	year = {2019},
	pages = {195-207},
	url = {https://www.sciencedirect.com/science/article/abs/pii/S016762961830290X},
	author = {Savannah Berquist and Timothy Layton and McGuire, Thomas and Rose, Sherri}
}
@article {632247,
	title = {The Effects of Plan Payment Rates on the Market for Medicare Advantage Dual-Eligible Special Needs Plans},
	journal = {Health Services Research},
	volume = {54},
	number = {5},
	year = {2019},
	pages = {1137-1145},
	url = {https://onlinelibrary.wiley.com/doi/abs/10.1111/1475-6773.13170},
	author = {Brian McGarry and Timothy Layton and David Grabowski}
}
@article {482946,
	title = {Screening in Contract Design: Evidence from the ACA Marketplaces},
	journal = {American Economic Journal: Economic Policy},
	volume = {11},
	number = {2},
	year = {2019},
	pages = {64-107},
	abstract = {We study insurers{\textquoteright} use of prescription drug formularies to screen consumers in the ACA Health Insurance exchanges. We begin by showing that exchange risk adjustment and reinsurance succeed in neutralizing selection incentives for most, but not all, consumer types. A minority of consumers, identifiable by demand for particular classes of prescription drugs, are predictably unprofitable. We then show that contract features relating to these drugs are distorted in a manner consistent with multidimensional screening. The empirical findings support a long theoretical literature examining how insurance contracts offered in equilibrium can fail to optimally trade off risk protection and moral hazard.\&nbsp;},
	url = {http://www.nber.org/papers/w22832},
	author = {Michael Geruso and Timothy J. Layton and Daniel Prinz}
}
@article {505256,
	title = {Deriving Risk Adjustment Payment Weights to Maximize Efficiency of Health Insurance Markets},
	journal = {Journal of Health Economics},
	volume = {61},
	year = {2018},
	month = {2017},
	pages = {93-110},
	url = {http://www.nber.org/papers/w22642},
	author = {Timothy J. Layton and Thomas G. McGuire and Richard van Kleef}
}
@article {620278,
	title = {Diagnosis of attention deficit hyperactivity disorder and time of school enrollment},
	journal = {New England Journal of Medicine},
	volume = {379},
	number = {22},
	year = {2018},
	pages = {2122-2130},
	url = {https://www.nejm.org/doi/full/10.1056/NEJMoa1806828},
	author = {Timothy J. Layton and Michael Barnett and Tanner Hicks and Jena, Anupam}
}
@article {632246,
	title = {Sample Selection for Medicare Risk Adjustment Due to Systematically Missing Data},
	journal = {Health Services Research},
	volume = {53},
	number = {6},
	year = {2018},
	pages = {4204-4223},
	author = {Savannah Bergquist and McGuire, Thomas and Timothy Layton and Rose, Sherri}
}
@article {482936,
	title = {Using {\textquoteright}Nudges{\textquoteright} to Enhance Competition and Save Consumers Money on Health Insurance Exchanges/Marketplaces: Evidence from a Field Experiment},
	journal = {Health Affairs},
	volume = {36},
	number = {2},
	year = {2017},
	pages = {311-319},
	url = {http://content.healthaffairs.org/content/36/2/311.abstract},
	author = {Keith Ericson and Jon Kingsdale and Timothy J. Layton and Adam Sacarny}
}
@article {632245,
	title = {Family Risk Pooling in Individual Health Insurance Markets},
	journal = {Health Services and Outcomes Research Methodology},
	volume = {17},
	number = {3-4},
	year = {2017},
	pages = {219-236},
	author = {Anna Sinaiko and Timothy Layton and Rose, Sherri and McGuire, Thomas}
}
@article {505221,
	title = {Computational health economics for identification of unprofitable health care enrollees},
	journal = {Biostatistics},
	year = {2017},
	month = {2017},
	author = {Rose, Sherri and Savannah Bergquist and Timothy J. Layton}
}
@article {482931,
	title = {Imperfect Risk Adjustment, Risk Preferences, and Sorting in Competitive Health Insurance Markets},
	journal = {Journal of Health Economics},
	volume = {56},
	year = {2017},
	pages = {259-280},
	abstract = {Much of the risk adjustment literature focuses on its effects on insurers{\textquoteright} incentives to inefficiently manipulate insurance contracts to {\textquotedblleft}cream-skim{\textquotedblright} the healthiest enrollees in the market (Glazer and McGuire 2000). However, when prices are set competitively as in the Exchanges established by the ACA, risk adjustment can also ameliorate another important type of selection problem, in the extreme case known as market unraveling or death spirals, where consumers inefficiently sort between plans due to the correlation between costs and demand. In this paper, I study how imperfect risk adjustment affects prices, sorting, and welfare in competitive health insurance markets. First, I build on the model of Einav et al. (2010) to show graphically and in a theoretical model that imperfect risk adjustment causes plan prices to be based on the portion of costs not predicted by the risk adjustment model ({\textquotedblleft}residual costs{\textquotedblright}), rather than total costs. This adjusting of costs has the potential to substantially weaken the connection between demand and costs that is the source of the adverse selection problem, and the extent to which it will do so depends on the correlation between demand and the costs predicted by the risk adjustment model ({\textquotedblleft}predicted costs{\textquotedblright}). In a setting where consumers are required to choose between two plans, and one plan is adversely selected, if predicted costs are positively (negatively) correlated with demand for that plan, risk adjustment will cause the prices of the two plans to converge (diverge), resulting in more (fewer) consumers choosing the adversely selected plan. I then use administrative health insurance claims data from a large employer to estimate the joint distribution of preferences, total costs, and predicted costs for a large sample of employees. I use the estimates to simulate competitive equilibria under several common forms of risk adjustment in a setting similar to the Exchanges. I find that in this setting when there is no risk adjustment, the market completely unravels and the entire market enrolls in the less comprehensive plan. However, when diagnosis-based risk adjustment similar to that being implemented in the Exchanges is implemented, a substantial portion of the market unraveling is undone, with over 80\% of individuals enrolling in the more comprehensive plan. Estimates suggest that this implies a substantial welfare gain of over $700 per person, per year in this setting.\&nbsp;},
	url = {https://www.sciencedirect.com/science/article/abs/pii/S0167629617303211},
	author = {Timothy J. Layton}
}
@article {505216,
	title = {Marketplace Plan Payment Options for Dealing with High-Cost Enrollees},
	journal = {American Journal of Health Economics},
	volume = {3},
	number = {2},
	year = {2017},
	month = {2017},
	pages = {165-191},
	url = {http://www.nber.org/papers/w22519},
	author = {Timothy J. Layton and Thomas G. McGuire}
}
@article {482926,
	title = {Measuring Efficiency of Health Plan Payment Systems in Managed Competition Health Insurance Markets},
	journal = {Journal of Health Economics},
	volume = {56},
	year = {2017},
	pages = {237-255},
	abstract = {Health insurance markets face two forms of adverse selection problems. On the demand side, adverse selection leads to plan price distortions and inefficient sorting of consumers across health plans. On the supply side, adverse selection creates incentives for plans to inefficiently distort benefits to attract profitable enrollees. These problems can be addressed by features of health plan payment systems such as reinsurance, risk adjustment, and premium categories. In this paper, we develop Harberger- type measures of the efficiency consequences of price and benefit distortions under a given payment system. Our measures are valid, that is, based on explicit economic models of adverse selection. Our measures are complete, in that they are able to incorporate multiple features of plan payment systems. Finally, they are practical, in that they are based on the ex ante data available to regulators and researchers during the design phase of payment system development, prior to observing actual insurer and consumer behavior. After developing the measures, we illustrate their use by comparing the performance of the payment system planned for implementation in the ACA Marketplaces in 2017 to several policy alternatives. We show that, in protecting against both types of selection problems, a payment system that incorporates reinsurance and prospective risk adjustment out-performs the planned payment system which includes only concurrent risk adjustment.},
	url = {https://www.sciencedirect.com/science/article/abs/pii/S0167629617305003},
	author = {Timothy J. Layton and Randall P. Ellis and Thomas G. McGuire and Richard van Kleef}
}
@article {523231,
	title = {Selection in Health Insurance Markets and Its Policy Remedies},
	journal = {Journal of Economic Perspectives},
	volume = {31},
	number = {4},
	year = {2017},
	month = {2017},
	pages = {23-50},
	url = {http://www.nber.org/papers/w23876},
	author = {Michael Geruso and Timothy J. Layton}
}
@article {482796,
	title = {Risk Corridors and Reinsurance in Health Insurance Marketplaces: Insurance for Insurers},
	journal = {American Journal of Health Economics},
	volume = {2},
	number = {1},
	year = {2016},
	pages = {66{\textendash}95},
	abstract = {Health Insurance Marketplaces established by the Affordable Care Act implement reinsurance and risk corridors. Reinsurance limits insurer costs associated with specific individuals, while risk corridors protect against aggregate losses. Both tighten the insurer{\textquoteright}s distribution of expected costs. This paper compares the economic costs and consequences of reinsurance and risk corridors. We simulate the insurer{\textquoteright}s cost distribution under reinsurance and risk corridors using data for a group of individuals likely to enroll in Marketplace plans from the Medical Expenditure Panel Survey. We compare reinsurance and risk corridors in terms of risk reduction and incentives for cost containment. We find that reinsurance and one-sided risk corridors achieve comparable levels of risk reduction for a given level of incentives. We also find that the policies being implemented in the Marketplaces (a mix of reinsurance and two-sided risk corridor policies) substantially limit insurer risk but perform similarly to a simpler stand-alone reinsurance policy.},
	url = {https://www.ncbi.nlm.nih.gov/pmc/articles/PMC4785828/$\#$!po=2.17391},
	author = {Timothy J. Layton and Thomas G. McGuire and Anna D. Sinaiko}
}
@article {482731,
	title = {Risk-Adjustment Simulation: Plans May Have Incentives To Distort Mental Health And Substance Use Coverage},
	journal = {Health Affairs},
	volume = {35},
	number = {6},
	year = {2016},
	pages = {1022-8},
	abstract = {Under the Affordable Care Act, the risk-adjustment program is designed to compensate health plans for enrolling people with poorer health status so that plans compete on cost and quality rather than the avoidance of high-cost individuals. This study examined health plan incentives to limit covered services for mental health and substance use disorders under the risk-adjustment system used in the health insurance Marketplaces. Through a simulation of the program on a population constructed to reflect Marketplace enrollees, we analyzed the cost consequences for plans enrolling people with mental health and substance use disorders. Our assessment points to systematic underpayment to plans for people with these diagnoses. We document how Marketplace risk adjustment does not remove incentives for plans to limit coverage for services associated with mental health and substance use disorders. Adding mental health and substance use diagnoses used in Medicare Part D risk adjustment is one potential policy step toward addressing this problem in the Marketplaces.},
	url = {http://content.healthaffairs.org/content/35/6/1022.abstract},
	author = {Ellen Montz and Timothy J. Layton and Alisa B. Busch and Randall P. Ellis and Rose, Sherri and Thomas G. McGuire}
}
@article {482891,
	title = {Higher Incentive Payments in Medicare Advantage{\textquoteright}s Pay-for-Performance Did Not Improve Quality, But Did Increase Plan Offerings},
	journal = {Health Services Research},
	volume = {50},
	number = {6},
	year = {2015},
	pages = {1810-28},
	abstract = {OBJECTIVE:To evaluate the effects of the size of financial bonuses on quality of care and the number of plan offerings in the Medicare Advantage Quality Bonus Payment Demonstration.DATA SOURCES:Publicly available data from CMS from 2009 to 2014 on Medicare Advantage plan quality ratings, the counties in the service area of each plan, and the benchmarks used to construct plan payments.STUDY DESIGN:The Medicare Advantage Quality Bonus Payment Demonstration began in 2012. Under the Demonstration, all Medicare Advantage plans were eligible to receive bonus payments based on plan-level quality scores (star ratings). In some counties, plans were eligible to receive bonus payments that were twice as large as in other counties. We used this variation in incentives to evaluate the effects of bonus size on star ratings and the number of plan offerings in the Demonstration using a differences-in-differences identification strategy. We used matching to create a comparison group of counties that did not receive double bonuses but had similar levels of the preintervention outcomes.PRINCIPAL FINDINGS:Results from the difference-in-differences analysis suggest that the receipt of double bonuses was not associated with an increase in star ratings. In the matched sample, the receipt of double bonuses was associated with a statistically insignificant increase of +0.034 (approximately 1 percent) in the average star rating (p \&gt; .10, 95 percent CI: -0.015, 0.083). In contrast, the receipt of double bonuses was associated with an increase in the number of plans offered. In the matched sample, the receipt of double bonuses was associated with an overall increase of +0.814 plans (approximately 5.8 percent) (p \&lt; .05, 95 percent CI: 0.078, 1.549). We estimate that the double bonuses increased payments by $3.43 billion over the first 3 years of the Demonstration.CONCLUSIONS:At great expense to Medicare, double bonuses in the Medicare Advantage Quality Bonus Payment Demonstration were not associated with improved quality but were associated with more plan offerings.\&nbsp;},
	url = {https://www.ncbi.nlm.nih.gov/pubmed/26549194},
	author = {Timothy J. Layton and Andrew Ryan}
}
@inbook {482906,
	title = {Risk Selection and Risk Adjustment},
	booktitle = {Encyclopedia of Health Economics},
	year = {2014},
	pages = {289{\textendash}297},
	publisher = {Elsevier Press},
	organization = {Elsevier Press},
	address = {Boston},
	abstract = {Risk selection, which occurs when an individual{\textquoteright}s demand for a product is correlated with her risk, creates inefficiencies and inequalities in markets for those products and services. Studies have shown that risk selection often occurs in health-care markets, especially in markets for health insurance. Risk adjustment is a method that has been developed to correct those inefficiencies by using models to calculate risk and compensate suppliers for the risk of each individual purchasing their products. These models have become more sophisticated in recent years and are currently used in the health-care systems of a number of countries.},
	url = {http://www.sciencedirect.com/science/article/pii/B9780123756787009184},
	author = {Randall P. Ellis and Timothy J. Layton}
}
@article {482916,
	title = {The Power of Reinsurance in Health Insurance Exchanges to Improve the Fit of the Payment System and Reduce Incentives for Adverse Selection},
	journal = {Inquiry},
	volume = {50},
	number = {4},
	year = {2013},
	pages = {255-74},
	abstract = {Risk adjustment and\&nbsp;reinsurance\&nbsp;protect plans against risk of losses and contend with\&nbsp;adverse\&nbsp;selection\&nbsp;in the new\&nbsp;health\&nbsp;insuranceExchanges. This article assesses the\&nbsp;power\&nbsp;of\&nbsp;reinsurance\&nbsp;in the context of other plan\&nbsp;payment\&nbsp;features, including prospective and concurrent risk adjustment. Using data from the Medicare Expenditure Panel Survey (MEPS) to draw an "Exchange population," we simulate the contribution of\&nbsp;reinsurance\&nbsp;to improving the\&nbsp;fit\&nbsp;of the\&nbsp;payment\&nbsp;system\&nbsp;to plan costs and to mitigating\&nbsp;incentives\&nbsp;for\&nbsp;adverse\&nbsp;selection\&nbsp;for groups of enrollees with selected chronic illnesses. Modest reductions in attachment points equate the\&nbsp;payment-system\&nbsp;fit\&nbsp;of retrospective to concurrent risk adjustment.\&nbsp;Reinsurance\&nbsp;is very powerful in fitting payments to costs and moderately effective in dealing with\&nbsp;selection\&nbsp;incentives.},
	url = {http://journals.sagepub.com.ezp-prod1.hul.harvard.edu/doi/abs/10.1177/0046958014538913?url_ver=Z39.88-2003\&rfr_id=ori:rid:crossref.org\&rfr_dat=cr_pub\%3dpubmed},
	author = {Jane Zhu and Timothy J. Layton and Anna D. Sinaiko and Thomas G. McGuire}
}
