"Sticker Shock" in Individual Insurance Under Health Reform

35 Pages Posted: 16 Jun 2014 Last revised: 23 Jun 2014

See all articles by Mark V. Pauly

Mark V. Pauly

University of Pennsylvania - Health Care Systems Department; National Bureau of Economic Research (NBER)

Scott E. Harrington

University of Pennsylvania - Wharton School

Adam Leive

University of Virginia - Frank Batten School of Leadership and Public Policy

Date Written: June 2014

Abstract

This paper provides estimates of the changes in premiums, average or expected out of pocket payments, and the sum of premiums and out of pocket payments (total expected price) for a sample of consumers who bought individual insurance in 2010 to 2012, comparing total expected prices before the Affordable Care Act with estimates of total expected prices if they were to purchase silver or bronze coverage after reform, before the effects of any premium subsidies. We provide comparisons for purchasers of self only coverage in California and in 23 states with minimal prior state premium regulation before the ACA now using federally managed exchanges. Using data from the Current Population Survey, we find that the average prices increased by 14 to 28 percent, with similar changes in California and the federal exchange states; we attribute the increase primarily to higher premiums in exchanges associated with insurer expectations of a higher risk population being enrolled. The increase in total expected price is similar for age-gender population subgroups except for a larger than average increases for older women. A welfare calculation of the change in risk premium associated with moving from coverage that prevailed before reform to bronze or silver coverage finds small changes.

Suggested Citation

Pauly, Mark V. and Harrington, Scott E. and Leive, Adam, "Sticker Shock" in Individual Insurance Under Health Reform (June 2014). NBER Working Paper No. w20223. Available at SSRN: https://ssrn.com/abstract=2450923

Mark V. Pauly (Contact Author)

University of Pennsylvania - Health Care Systems Department ( email )

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National Bureau of Economic Research (NBER)

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Scott E. Harrington

University of Pennsylvania - Wharton School ( email )

3641 Locust Walk
Colonial Penn Center
Philadelphia, PA 19104-6358
United States
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215-573-2157 (Fax)

HOME PAGE: http://scottharringtonphd.com/

Adam Leive

University of Virginia - Frank Batten School of Leadership and Public Policy ( email )

235 McCormick Rd.
P.O. Box 400893
Charlottesville, VA 22904-4893
United States

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