This dissertation studies the impact of Medicaid expansion on the liability insurance industry. Within the three chapters, the first two chapters focus on the medical liability insurance industry, and the third chapter focuses on the auto insurance industry. Chapter 1, “Medicaid Expansion and Medical Liability Costs”, examines the impact of health insurance expansion on medical liability costs using the case of the Affordable Care Act’s (ACA) Medicaid expansion. Medicaid expansion has increased the demand for medical services, but in doing so it may also have increased physicians’ liability in medical practice. By studying malpractice costs to insurers, medical practitioners, and hospitals in the U.S. for the period 2010–2018, we find insurers operating in states with Medicaid expansion experienced significantly higher medical liability costs than those in non-expansion states. While insurers in expansion states did increase premiums, the increase was not enough to fully offset rising costs. Moreover, we find that tort reforms did not mitigate ACA-induced malpractice liability costs. We show this is because Medicaid expansion increased malpractice costs mainly by increasing claim frequency while tort reforms generally focus on reducing claim severity. We further find little evidence that hospitals paid higher malpractice insurance premiums, self-insurance, or incurred higher out-of-pocket medical liability losses after Medicaid expansion. Taken together, our results imply that it is medical practitioners and malpractice insurers who bear the rising medical liability costs. Chapter 2, “Medicaid Expansion and Medical Liability Insurance Prices” extends the first chapter to study the impact of Medicaid expansion on medical liability insurance prices for three specialties, internal medicine, general surgery, and obstetrics-gynecology (OB-GYN). As Medicaid expansion increased medical liability costs to insurers, they may react by increasing medical malpractice insurance prices. By studying counties in expansion states and non-expansion states and bordering counties with different Medicaid expansion status over the years from 2010-2018, we find that Medicaid expansion leads to significantly higher medical liability insurance prices two years after the expansion on average and the impact is strongest for internal medicine and general medicine but less so for OB-GYN. Our finding suggests that the expansion of health insurance could increase liability costs to medical practitioners. Auto insurance provides coverage of healthcare for injured drivers even for those without traditional health insurance coverage. The expansion of public health insurance provides low-income injured drivers with an additional source of coverage for medical bills. This may change drivers’ incentives for using auto insurance and the ultimate payments made by auto insurers. In Chapter 3, “Public Health Insurance Expansion and Auto Insurance: The Case of Medicaid Expansion”, we first use a simple theoretical model to illustrate how obtaining public health insurance mitigates the incentive of insured drivers to engage in claims buildup. We then empirically test how the Affordable Care Act (ACA)’s Medicaid expansion changed the medical costs covered by auto insurance. By studying private passenger auto insurers in expansion states and non-expansion states between 2010 and 2018, we find that Medicaid expansion led to significantly lower auto insurance losses and premiums. We further show that the results were driven by the decreasing losses and premiums for third-party liability insurers but not in the states with no-fault insurance. / Business Administration/Risk Management and Insurance

<p>The dissertation is consisted of two essays on Affordable Care Act Marketplace plan pricing. These two essays are the two chapters of the dissertation respectively.  </p> <p>First essay studies the effect of Medicaid expansion on ACA Marketplace plan premium. The Affordable Care Act (ACA) aims to mitigate Americans’ uninsured crisis by expanding Medicaid and establishing the ACA Marketplace. The Medicaid expansion has a profound impact on Marketplace plan premiums. On the one hand, it lowers the premiums because the expansion drives out the people with lower income from Marketplace plans, resulting in a pool with a lower risk score for these plans. On the other hand, the Medicaid expansion may shrink the pool size of Marketplace plans, resulting in a riskier pool and a higher Marketplace plan premium. Integrating data from multiple sources, we study how these two competing effects vary across markets with different demographics. We find that the premium-reduction effect is less pronounced in more wealthy markets, while the premium-increase effect is less pronounced in more populous markets. We further find that the Medicaid expansion overall decreased the Marketplace premiums, with more reduction for Silver plans than Bronze plans. We also explore how the Medicaid expansion can lower Marketplace premiums indirectly through the change of the market structure. We finally show the heterogeneity of the net impact of the Medicaid expansion on Marketplace premiums across markets. Our results offer important policy and managerial implications.</p> <p>The second essay explores the effect of insurer competition on marketplace plan premiums. ACA Marketplace is a new market opportunity for insurers that grant them access to a new group of customers who were not insured before. Previous studies utilize ACA marketplace data and find that additional insurers on the market are associated with a premium decrease in Marketplaces for a benchmark plan. However, the impact of the insurer entry on the premium is not the same for all plans. Using data from 2014 to 2017, we empirically examine the effect of insurer entry on the premium on Marketplace. Our study first confirms the finding that the premium of the second-lowest Silver plans decreases in the number of insurers. We further find evidence of different price trends across plans of different quality levels with additional insurers on the market. When more insurers are on the market, the premium increases for higher-end plans and decreases for lower-end plans. Our analysis shows that intensified competition may exaggerate price discrimination in certain segments while alleviate price discrimination in other markets. The results offer important managerial implications. </p>

In the wake of the Affordable Care Act, some US states expanded Medicaid eligibility to low-income, working-age adults while others did not. This study investigates whether this divergence induces migration across state borders to obtain Medicaid, especially in border regions of expansion states. It compares border with interior regions’ in-migration in the concerned subgroup before and after the Medicaid expansion in linear probability difference-in-difference and triple difference regression frameworks. Using individual-level data from the American Community Surveys over 2012–2017, this study finds only a statistically significant increase in in-migration to border regions after the expansion in Arkansas. The differing results across states could stem from statistical power issues of the employed regression analysis but might also result from state peculiarities. In Arkansas, the odds of having migrated increase by about 48% in its border regions after the Medicaid expansion compared to before and control regions. If all additional migrants take up Medicaid, the number of Medicaid beneficiaries in these regions increases by approximately 4%. Thus, even if the induced migration is statistically significant, it appears unlikely to impose meaningful fiscal externalities at the regional level. / Im Zuge des Affordable Care Acts haben einige US-Bundesstaaten den Anspruch auf Medicaid auf einkommensschwache Erwachsene im arbeitsfähigen Alter ausgeweitet, während andere Bundesstaaten dies nicht taten. Diese Studie untersucht, ob diese Divergenz zu einer Migration über die Bundesstaatsgrenzen führt, um Medicaid zu erhalten, insbesondere in Grenzregionen von Reformbundesstaaten. Sie vergleicht die Zuwanderung in Grenzregionen mit der Zuwanderung in das Landesinnere in der betroffenen Gruppe vor und nach der Medicaid-Ausweitung in linearen Wahrscheinlichkeits-Differenz-in-Differenz- und Dreifach-Differenz-Regressionsanalysen. Unter Verwendung von Daten auf Individualebene aus den American Community Surveys der Jahre 2012–2017 findet diese Studie nur in Arkansas einen statistisch signifikanten Anstieg der Zuwanderung in die Grenzregionen nach der Ausweitung. Die unterschiedlichen Ergebnisse in den einzelnen Bundesstaaten könnten von Problemen mit der statistischen Aussagekraft der durchgeführten Regressionsanalyse herrühren. Sie könnten aber auch aus Besonderheiten der jeweiligen Bundesstaaten resultieren. Eine zufällig ausgewählte Person in den Grenzregionen von Arkansas hat nach der Medicaid-Ausweitung eine um 48% erhöhte Wahrscheinlichkeit zugewandert zu sein im Vergleich zu vorher und den Kontrollregionen. Falls alle zusätzlichen Migranten Medicaid in Anspruch nehmen, steigt die Zahl der Medicaid-Empfänger in diesen Regionen um etwa 4%. Es scheint somit unwahrscheinlich, dass die induzierte Migration zu bedeutenden fiskalischen Externalitäten auf regionaler Ebene führt, selbst wenn der Migrationseffekt statistisch signifikant ist.

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