Working Paper: NBER ID: w30214
Authors: Leonardo Bursztyn; Jonathan T. Kolstad; Aakaash Rao; Pietro Tebaldi; Noam Yuchtman
Abstract: Politicizing policies designed to address market failures can diminish their effectiveness. We document a pattern of “political adverse selection” in the health insurance exchanges established under the Affordable Care Act (ACA; “Obamacare” in political debates): Republicans enrolled at lower rates than Democrats and independents, a gap driven by healthier Republicans. This selection raised public subsidy spending by approximately $124 per enrollee annually (2.4% of average cost). We field a survey to show this selection does not exist for other insurance products. Lower enrollment and higher costs are concentrated in more Republican areas, potentially contributing to polarized views of the policy.
Keywords: political adverse selection; health care; Affordable Care Act; partisanship; market outcomes
JEL Codes: H0; I13; L38
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Political affiliation (Republican) (K16) | Enrollment decisions in ACA marketplaces (G52) |
| Political affiliation (Republican) (K16) | Average costs in ACA marketplaces (G52) |
| Political adverse selection (D72) | Overall enrollment (I23) |
| Political adverse selection (D72) | Public spending on subsidies for low-income enrollees (H51) |