Table 4:
Results: Allocations and Welfare under Non-Market Mechanisms
| Planner | Public Option |
||
|---|---|---|---|
| Social Planner | with subsidy | without subsidy | |
| (1) | (2) | (3) | |
| (1) Consumer surplus, $M | 3,258 | 3,005 | 970 |
| (2) Insurer profit, $M | (7,088) | - | - |
| (3) Consumer and producer surplus, $M | (3,830) | 3,005 | 970 |
| (4) Subsidy spending in PDP, $M | - | 6,860 | - |
| (5) Reinsurance spending in PDP, $M | - | - | - |
| (6) Additional subsidy spending in MA-PD, $M | - | - | - |
| (7) Total government spending, $M | - | 6,860 | - |
| (8) Counterfactual subsidy spending if enrolled in MA-PD, $M | 6,943 | 5,599 | 154 |
| (9) Counterfactual reinsurance spending if enrolled in MA-PD, $M | 1,770 | 1,433 | 41 |
| (10) Total opportunity cost of government spending, $M | 8,713 | 7,032 | 195 |
| (11) Total surplus; not accounting for opportunity cost of gov. spendin | (3,830) | (5,912) | 970 |
| (12) Total surplus; accounting for opportunity cost of gov. spending, $ | 5,371 | 3,229 | 1,223 |
| (13) Return on nominal dollar of gov. spending, $, no DWL of tax | - | (0.56) | - |
| (14) Return on nominal dollar of gov. spending, $, with DWL of tax | - | (0.66) | - |
| (15) Opportunity cost adjusted return on dollar of gov. spending, $ | - | 0.47 | - |
| (16) Characteristics of the allocation | |||
| (17) Inside option enrollment, ‘000 | 12,374 | 10,237 | 322 |
| (18) Inside option enrollment, percent of total market | 57 | 47 | 1 |
| (19) Share of inside option enrollment by Risk Group 1 consumers, per | 7 | 9 | 1 |
| (20) Risk Group 2 | 18 | 19 | 71 |
| (21) Risk Group 3 | 61 | 59 | 10 |
| (22) Risk Group 4 | 13 | 12 | 19 |
| (23) Risk Group 5 | 1 | 1 | 0 |
| (24) Average weighted premium, $ | 374 | 87 | 728 |
| (25) Average weighted bid, $ | 374 | 758 | 728 |
Table reports the level of consumer surplus, producer surplus, government spending, and total welfare under counterfactual allocations without market mechanisms. The non-market mechanisms are defined in Section 5.1. To compute these objects, we use estimates of demand, marginal costs, and the derivation of the social planner’s problem in Appendix Section E. All quantities are computed as discussed in Section 3 and Appendix Section E. These baseline results assume that the cost of public funds (λ) is equal to 1.3. Negative quantities are reported in parentheses.