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Leemore Dafny’s examination of health-insurance markets is said to have helped mold the state and federal exchanges that are central to Obamacare’s 2010 health-care law.
Her 2010 paper in the American Economic Review found that a lack of competition in insurance markets drives up premiums, that insurers charge more profitable businesses higher premiums, a relationship strongest in geographic markets with a small number of carriers. David Dranove at Northwestern said Leemore identified that just having 2 or 3 plans in a market is just not enough.
Dafny said businesses engage in practices that are profit-maximizing and not welfare-maximizing. In 2012 she co-authored a paper that found increases in local concentration between 1998 and 2006 caused premiums in average local health-insurance markets to rise 7 percent.
David Cutler at Harvard said Dafny is well-equipped to use economics to guide policy, and would not be surprised if she ended up as the chief of antitrust in the US.
Martin Feldstein said Dafny, once his research assistant, was very bright a very good economist.
Jonathan Gruber at MIT said Leemore’s 2010 study on health-insurance competition showed that insurers have market power, and that this remains unresolved.
American Economic Journal: Economic Policy found that consumers would benefit from more plan options.
Read the full article at http://www.bloomberg.com/news/2013-05-30/obamacare-competition-has-roots-in-economist-s-passion.html
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