Figure 1 illustrates the three major components to our methodological approach: 1) Model Estimation; 2) Choice Set Assignment and Prediction; and 3) Policy Simulation. This particular model shows that more than one database was required to complete the task. Several steps were need for this model estimation.
Figure 2 illustrates our method of capturing the relationship between costs and health risk. Starting from a premium that is too high for equilibrium (i.e., point A), the premium falls and enrollment increases until the two lines converge to a single premium and enrollment (i.e., Point B). There is no guarantee that the model will be stable as shown here. We know that the "choice depends on premium" line (i.e. the demand curve) slopes downward, but the "premium depends on choice" line might slope up or down. The model will be stable if the demand curve is the steeper of the two lines.
Figure A1 illustrates a diagram that depicts the age group of 19-64, this corresponds to 147,955,033 non-elderly adults in the United States. They are categorized into three different groups Missing age, Not employed and Employed. For this analysis, data from four large employers representing approximately 160,000 covered lives of information (including dependents) were available.