American Economic Journal:
Applied Economics
ISSN 1945-7782 (Print) | ISSN 1945-7790 (Online)
Adverse Selection in ACA Exchange Markets: Evidence from Colorado
American Economic Journal: Applied Economics
vol. 11,
no. 2, April 2019
(pp. 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.Citation
Panhans, Matthew. 2019. "Adverse Selection in ACA Exchange Markets: Evidence from Colorado." American Economic Journal: Applied Economics, 11 (2): 1–36. DOI: 10.1257/app.20170117Additional Materials
JEL Classification
- D82 Asymmetric and Private Information; Mechanism Design
- G22 Insurance; Insurance Companies; Actuarial Studies
- H51 National Government Expenditures and Health
- H75 State and Local Government: Health; Education; Welfare; Public Pensions
- I13 Health Insurance, Public and Private
- I18 Health: Government Policy; Regulation; Public Health
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