Working Paper: NBER ID: w20223
Authors: Mark Pauly; Scott Harrington; Adam Leive
Abstract: This paper provides estimates of the changes in premiums, average or expected out of pocket payments, and the sum of premiums and out of pocket payments (total expected price) for a sample of consumers who bought individual insurance in 2010 to 2012, comparing total expected prices before the Affordable Care Act with estimates of total expected prices if they were to purchase silver or bronze coverage after reform, before the effects of any premium subsidies. We provide comparisons for purchasers of self only coverage in California and in 23 states with minimal prior state premium regulation before the ACA now using federally managed exchanges. Using data from the Current Population Survey, we find that the average prices increased by 14 to 28 percent, with similar changes in California and the federal exchange states; we attribute the increase primarily to higher premiums in exchanges associated with insurer expectations of a higher risk population being enrolled. The increase in total expected price is similar for age-gender population subgroups except for a larger than average increases for older women. A welfare calculation of the change in risk premium associated with moving from coverage that prevailed before reform to bronze or silver coverage finds small changes.
Keywords: Affordable Care Act; Insurance Premiums; Health Reform
JEL Codes: I11; I13
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| ACA implementation (G52) | increase in insurance prices (G52) |
| higher-risk individuals enrolling (G52) | increase in insurance prices (G52) |
| ACA implementation (G52) | higher premiums expected by insurers (G52) |
| change in risk premium from prior coverage to bronze/silver (G52) | modest effect on welfare (D69) |
| ACA implementation (G52) | sticker shock in insurance prices (G52) |