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Eight Years Later: Analyses of ACA Health Insurance Markets

Paper Session

Friday, Jan. 5, 2018 10:15 AM - 12:15 PM

Marriott Philadelphia Downtown, Grand Ballroom Salon J
Hosted By: Health Economics Research Organization & American Economic Association
  • Chair: Donald Yett, University of Southern California

Screening in Contract Design: Evidence From the ACA Health Insurance Exchanges

Timothy Layton
,
Harvard University
Michael Geruso
,
University of Texas-Austin
Daniel Prinz
,
Harvard University

Abstract

By steering patients to cost-effective substitutes, the tiered design of prescription drug formularies can improve the efficiency of healthcare consumption in the presence of moral hazard. However, a long theoretical literature describes how contract design can also be used to screen consumers by profitability. In this paper, we study this type of screening in the ACA Health Insurance Exchanges. We first show that despite large regulatory transfers that neutralize selection incentives for most consumer types, some consumers are unprofitable in a way that is predictable by their prescription drug demand. Then, using a difference-in-differences strategy that compares Exchange formularies where these selection incentives exist to employer plan formularies where they do not, we show that Exchange insurers design formularies as screening devices that are differentially unattractive to unprofitable consumer types. This results in inefficiently low levels of coverage for the corresponding drugs in equilibrium. Although this type of contract distortion has been highlighted in the prior theoretical literature, until now empirical evidence has been rare. The impact on out-of-pocket costs for consumers affected by the distortion is substantial—potentially thousands of dollars per year—and the distortion creates an equilibrium in which contracts that efficiently trade off moral hazard and risk protection cannot exist.

Early ACA Medicaid Expansions: Impacts on Enrollment and Access

Vilsa Curto
,
Harvard University
Monica Bhole
,
Stanford University

Abstract

We use four states that were early adopters of Medicaid expansion to study how this expansion affects enrollment and access to physicians for Medicaid enrollees. We use the universe of Medicaid enrollment and claims data to construct state-month-level measures of enrollment, enrollee composition, and access to physicians. Using a differences-in-differences framework, we find that Medicaid expansion leads to a 13 percent increase in overall enrollment, a 27 percent increase in enrollment among adults ages 23 to 65, and a 16 percent increase in the number of Medicaid patients seen by primary care physicians. We find no statistically significant increase in the number of Medicaid patients seen among obstetricians/gynecologists and pediatricians, who are less likely to be affected by the expansion. We find that Medicaid expansion increases physician participation on the intensive margin but not on the extensive margin.

Consumer Choice and Learning in Private Insurance Markets: Evidence From the ACA Marketplaces

Aditi Sen
,
Johns Hopkins University
Thomas DeLeire
,
Georgetown University

Abstract

In this paper, we examine consumer plan choice and learning in 2015 and 2016 in the Federally facilitated Marketplaces (FFM) for health insurance established by the Affordable Care Act (ACA). The FFM offers a useful context for studying choice in private insurance markets.
Plans offered in the FFM are displayed in an online “exchange” and are required to meet requirements regarding coverage, premiums, benefits, and cost-sharing, including minimum actuarial values. These requirements as well as the design of the exchange is intended to facilitate consumer shopping among plans and there is evidence that consumers actively shop and switch plans in the FFM at higher rates than in the market for employer-sponsored insurance. Understanding the dynamics of consumer choice in this setting is important given that the Marketplaces are still relatively new markets for consumers and insurers and that the regulations described above were intended to standardize and improve the options for consumers getting insurance through the non-group market. A deeper understanding of consumer decision-making is fundamental to improving the design of insurance markets as well as ensuring that the individual insurance market is attractive to insurers.

A combination of public data on plans available through the FFM at the county level and associated benefit design features and administrative individual-level panel data on FFM enrollment allows us to identify each enrollee’s choice set and their chosen plan as well as to see how their choices evolved over time. Further, these data allow us to calculate the actual premiums, deductibles, and max OOP levels that consumers faced, taking into account cost-sharing reductions and other subsidies for which they were eligible. We characterize the choice sets of Marketplace enrollees and estimate discrete choice models of individual-level plan choice that account for plan characteristics and interactions with individual characteristics. These choice models allow us to
Discussant(s)
Jonathan Gruber
,
Massachusetts Institute of Technology
Sarah Miller
,
University of Michigan
Michael Chernew
,
Harvard University
JEL Classifications
  • I1 - Health