Group Health Insurance Versus ACA Marketplaces: Selection, Subsidies, and Welfare

Sebastian Fleitas, Caitlyn Fleming, Gautam Gowrisankaran and Anthony T. Lo Sasso
Authors registered in the RePEc Author Service: Anthony Lo Sasso

No 33938, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: The Affordable Care Act (ACA) changed incentives for individual and employer-sponsored insurance. Using unique small group market (SGM) data with detailed claims and enrollment information, we analyze the welfare gains across households in the SGM from alternative formulations of ACA health insurance exchanges (HIXs). Accounting for observable heterogeneity increases estimated demand elasticities. Shutting down the SGM would reduce equilibrium adverse selection in HIX-type markets, increasing welfare for households moved to HIXs by $842 annually. The majority of households would obtain higher equilibrium welfare from HIXs, stemming from having more choices. Adding the 2014 ACA penalties only modestly decreases adverse selection.

JEL-codes: H30 I13 L11 (search for similar items in EconPapers)
Date: 2025-06
Note: EH IO
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