Working Paper: NBER ID: w27695
Authors: Naoki Aizawa; You Suk Kim
Abstract: This paper studies the effect of provision of information by the government and private firms through marketing activities in the Affordable Care Act health insurance marketplace. Using detailed TV advertising data, we present evidence that government advertising and private advertising target different geographical areas and provide different messaging content. We estimate the impacts of both types of advertising on consumer demand. We find that government advertising increases overall enrollment and enhances welfare; however, it does not induce consumers to select a particular insurer. Private advertising, in contrast, increases demand for specific insurers, and insurers spending more on advertising tend to offer plans associated with higher consumer utility. However, private advertising alone does not induce consumers to select insurers with better plans very efficiently because it tends to be excessive due to rent-seeking competition.
Keywords: Advertising; Health Insurance; Market-Based Programs
JEL Codes: G21; I13; I18; L11
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Federal government advertising (M38) | Overall enrollment in the ACA marketplace (G52) |
| Private advertising (D49) | Insurer's own enrollment (G52) |
| Private advertising (D49) | Overall market enrollment (I11) |
| Government advertising (M38) | Choice frictions related to program participation (D91) |
| Private advertising (D49) | Consumer choices (D19) |