Estimating Equilibrium in Health Insurance Exchanges: Price Competition and Subsidy Design under the ACA

Pietro Tebaldi

No 29869, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: In government-sponsored health insurance, subsidy design affects market outcomes. First, holding premiums fixed, subsidies determine insurance uptake and average cost. Insurers then respond to these changes, adjusting premiums. Combining data from the first four years of the California ACA marketplace with a model of insurance demand, cost, and insurers’ competition, I quantify the impact of alternative subsidy designs on premiums, enrollment, costs, public spending, and consumer surplus. Younger individuals are more price sensitive and cheaper to cover. Increasing subsidies to this group would make all buyers better off, increase market participation, and lower average costs and average subsidies.

JEL-codes: I13 I18 L98 (search for similar items in EconPapers)
Date: 2022-03
New Economics Papers: this item is included in nep-com, nep-hea, nep-ias and nep-rmg
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