We study the welfare effects of offering choice over coverage levels—“vertical choice”—in regulated health insurance markets. We emphasize that heterogeneity in efficient coverage level is not sufficient to motivate choice. When premiums cannot reflect individuals’ costs, it may not be in consumers’ best interest to select their efficient coverage level. We show that vertical choice is efficient only if consumers with higher willingness to pay have a higher efficient level of coverage. We investigate this condition empirically and find that as long as a minimum coverage level can be enforced, the welfare gains from vertical choice are either zero or economically small. (JEL D82, G22, H75, I13, I21)

中文翻译：

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健康保险市场何时应该有垂直选择？

我们研究了在受监管的健康保险市场中提供覆盖水平选择的福利效应——“垂直选择”。我们强调有效覆盖水平的异质性不足以激发选择。当保费不能反映个人的成本时，选择他们的有效覆盖水平可能不符合消费者的最佳利益。我们表明，只有当支付意愿更高的消费者拥有更高的有效覆盖水平时，垂直选择才是有效的。我们从经验上调查了这种情况，发现只要可以强制执行最低覆盖水平，垂直选择的福利收益要么为零，要么在经济上很小。(JEL D82, G22, H75, I13, I21)