Working Paper: NBER ID: w29178
Authors: Benjamin R. Handel; Jonathan T. Kolstad
Abstract: The regulated insurance exchanges set up in the Affordable Care Act (ACA) were designed to deliver affordable, efficient health coverage through private insurers. It is crucial to study the complex industrial organization (IO) of these exchanges in order to assess their impacts to date, during the first decade of the ACA, and in order to project their impacts going forward. We revisit the inherent market failures in health care markets that necessitate key ACA exchange regulations and investigate whether they have succeeded in their goals of expanding coverage, creating robust marketplaces, providing product variety, and generating innovation in health care delivery. We discuss empirical IO research to date and also highlight shortcomings in the existing research that can be addressed moving forward. We conclude with a discussion of IO research-based policy lessons for the ACA exchanges and, more generally, for managed competition of private insurance in health care.
Keywords: Affordable Care Act; health insurance; market regulation; insurance exchanges; industrial organization
JEL Codes: G22; H2; I11; I13
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| ACA regulations (G52) | increased coverage rates (I13) |
| design of the exchanges (D47) | price competition among insurers (L11) |
| price competition among insurers (L11) | lower premiums (G52) |
| price competition among insurers (L11) | greater product variety (L15) |
| regulations limiting price discrimination (L42) | protect consumers with higher health risks (D18) |
| competition among insurers (G22) | development of new products and services (O36) |