Estimating Equilibrium in Health Insurance Exchanges: Price Competition and Subsidy Design under the ACA

78 Pages Posted: 19 Aug 2017

See all articles by Pietro Tebaldi

Pietro Tebaldi

University of Chicago - Department of Economics

Date Written: August 11, 2017

Abstract

To design premium subsidies in a health insurance market it is necessary to estimate consumer demand, cost, and study how different subsidy schemes affect insurers’ incentives. I combine data on household-level enrollment and plan-level claims from the Californian Affordable Care Act insurance exchange with a model of insurance demand and insurers’ competition to assess equilibrium outcomes under alternative subsidy designs. I estimate that younger households are significantly more price sensitive and cheaper to cover. Consequently, counterfactuals show that providing more generous subsidies to this group leads to equilibria where all buyers are better off and per-person public spending is lower.

Keywords: Subsidies, Health Insurance, Health Reform, ACA, Health Exchanges

JEL Classification: I11, I13, I18, L51, H51, L88

Suggested Citation

Tebaldi, Pietro, Estimating Equilibrium in Health Insurance Exchanges: Price Competition and Subsidy Design under the ACA (August 11, 2017). Becker Friedman Institute for Research in Economics Working Paper No. 2017-05. Available at SSRN: https://ssrn.com/abstract=3020103 or http://dx.doi.org/10.2139/ssrn.3020103

Pietro Tebaldi (Contact Author)

University of Chicago - Department of Economics ( email )

1126 E. 59th St
Chicago, IL 60637
United States

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