Adverse Selection in ACA Exchange Markets: Evidence from Colorado

Matthew Panhans

American Economic Journal: Applied Economics, 2019, vol. 11, issue 2, 1-36

Abstract: This study tests for adverse selection in the Affordable Care Act (ACA) health insurance exchanges established in 2014 and quantifies the welfare consequences. Using a new statewide dataset of medical claims from Colorado, I use plausibly exogenous premium variation generated by geographic discontinuities to test for selection. Specifically, each $1 increase in monthly premiums causes a $0.85–0.95 increase in annual medical expenditures of the insured population in 2014, with attenuated effects in 2015. These estimates are consistent with the prevalence of chronic conditions and difference-in-differences estimates. The results offer the first quasi-experimental evidence of adverse selection in the ACA markets.

JEL-codes: D82 G22 H51 H75 I13 I18 (search for similar items in EconPapers)
Date: 2019
Note: DOI: 10.1257/app.20170117
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Citations: View citations in EconPapers (16)

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