Polarization and Public Policy: Political Adverse Selection under Obamacare

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

No 30214, NBER Working Papers from National Bureau of Economic Research, Inc

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.

JEL-codes: H0 I13 L38 (search for similar items in EconPapers)
Date: 2022-07
New Economics Papers: this item is included in nep-hea and nep-pol
Note: EH IO PE POL
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