Polarization and Public Policy: Political Adverse Selection Under Obamacare

41 Pages Posted: 4 Jul 2022 Last revised: 13 Jun 2024

See all articles by Leonardo Bursztyn

Leonardo Bursztyn

University of Chicago - Department of Economics; National Bureau of Economic Research (NBER)

Jonathan Kolstad

University of California, Berkeley - Haas School of Business; National Bureau of Economic Research (NBER)

Aakaash Rao

Harvard University, Department of Economics

Pietro Tebaldi

Columbia University

Noam Yuchtman

London School of Economics

Multiple version iconThere are 2 versions of this paper

Date Written: July 2022

Abstract

Politicizing policies designed to address market failures can diminish their effectiveness. We document a pattern of “political adverse selection” in the health insurance exchanges established under the Affordable Care Act (ACA; “Obamacare” in political debates): Republicans enrolled at lower rates than Democrats and independents, a gap driven by healthier Republicans. This selection raised public subsidy spending by approximately $124 per enrollee annually (2.4% of average cost). We field a survey to show this selection does not exist for other insurance products. Lower enrollment and higher costs are concentrated in more Republican areas, potentially contributing to polarized views of the policy.

Suggested Citation

Bursztyn, Leonardo and Kolstad, Jonathan and Rao, Aakaash and Tebaldi, Pietro and Yuchtman, Noam, Polarization and Public Policy: Political Adverse Selection Under Obamacare (July 2022). NBER Working Paper No. w30214, Available at SSRN: https://ssrn.com/abstract=4153107

Leonardo Bursztyn (Contact Author)

University of Chicago - Department of Economics ( email )

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National Bureau of Economic Research (NBER)

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Jonathan Kolstad

University of California, Berkeley - Haas School of Business ( email )

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Berkeley, CA 94720
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National Bureau of Economic Research (NBER)

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Aakaash Rao

Harvard University, Department of Economics ( email )

Cambridge, MA 02138

HOME PAGE: http://aakaashrao.github.io

Pietro Tebaldi

Columbia University

3022 Broadway
New York, NY 10027
United States

Noam Yuchtman

London School of Economics ( email )

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