Polarisation and public policy: political adverse selection under Obamacare

Leonardo Bursztyn, Jonathan T. Kolstad, Aakaash Rao, Pietro Tebaldi and Noam Yuchtman

LSE Research Online Documents on Economics from London School of Economics and Political Science, LSE Library

Abstract: Politicising 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 (colloquially, ‘Obamacare’): Republicans enrolled at lower rates than Democrats and independents, a gap driven by healthier Republicans. This selection raised public subsidy spending by approximately $155 per enrollee annually (3.2% of average cost). We fielded a survey to show that this selection does not exist for other insurance products. Lower enrolment and higher costs are concentrated in more Republican areas, potentially contributing to polarised views of the policy.

Keywords: political polarisation; ideology; adverse selection; health insurance; healthcare reform (search for similar items in EconPapers)
JEL-codes: H40 H51 P00 (search for similar items in EconPapers)
Pages: 20 pages
Date: 2026-02-02
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Published in The Economic Journal, 2, February, 2026. ISSN: 0013-0133

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https://researchonline.lse.ac.uk/id/eprint/129368/ Open access version. (application/pdf)

Related works:
Working Paper: Polarization and Public Policy: Political Adverse Selection under Obamacare (2022)
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Persistent link: https://EconPapers.repec.org/RePEc:ehl:lserod:129368

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