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Do individuals respond to cost-sharing subsidies in their selections of marketplace health insurance plans?

Author

Listed:
  • DeLeire, Thomas
  • Chappel, Andre
  • Finegold, Kenneth
  • Gee, Emily

Abstract

The Affordable Care Act (ACA) provides assistance to low-income consumers through both premium subsidies and cost-sharing reductions (CSRs). Low-income consumers’ lack of health insurance literacy or information regarding CSRs may lead them to not take-up CSR benefits for which they are eligible. We use administrative data from 2014 to 2016 on roughly 22 million health insurance plan choices of low-income individuals enrolled in ACA Marketplace coverage to assess whether they behave in a manner consistent with being aware of the availability of CSRs. We take advantage of discontinuous changes in the schedule of CSR benefits to show that consumers are highly sensitive to the value of CSRs when selecting insurance plans and that a very low percentage select dominated plans. These findings suggest that CSR subsidies are salient to consumers and that the program is well designed to account for any lack of health insurance literacy among the low-income population it serves.

Suggested Citation

  • DeLeire, Thomas & Chappel, Andre & Finegold, Kenneth & Gee, Emily, 2017. "Do individuals respond to cost-sharing subsidies in their selections of marketplace health insurance plans?," Journal of Health Economics, Elsevier, vol. 56(C), pages 71-86.
    • Handle: RePEc:eee:jhecon:v:56:y:2017:i:c:p:71-86
    DOI: 10.1016/j.jhealeco.2017.09.008
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    Citations

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    Cited by:

    1. Mukhopadhyay, Sankar & Wendel, Jeanne & Zou, Miaomiao, 2019. "Impacts of shifting responsibility for high-cost individuals on Health Insurance Exchange plan premiums and cost-sharing provisions," Journal of Health Economics, Elsevier, vol. 66(C), pages 180-194.
    2. Drake, Coleman, 2019. "What are consumers willing to pay for a broad network health plan?: Evidence from covered California," Journal of Health Economics, Elsevier, vol. 65(C), pages 63-77.
    3. Kurt Lavetti & Thomas DeLeire & Nicolas R. Ziebarth, 2023. "How do low‐income enrollees in the Affordable Care Act marketplaces respond to cost‐sharing?," Journal of Risk & Insurance, The American Risk and Insurance Association, vol. 90(1), pages 155-183, March.
    4. Gallagher, Emily A. & Gopalan, Radhakrishnan & Grinstein-Weiss, Michal, 2019. "The effect of health insurance on home payment delinquency: Evidence from ACA Marketplace subsidies," Journal of Public Economics, Elsevier, vol. 172(C), pages 67-83.
    5. Drake, Coleman & Anderson, David & Cai, Sih-Ting & Sacks, Daniel W., 2023. "Financial transaction costs reduce benefit take-up evidence from zero-premium health insurance plans in Colorado," Journal of Health Economics, Elsevier, vol. 89(C).
    6. Heim, Bradley T. & Hunter, Gillian & Isen, Adam & Lurie, Ithai Z. & Ramnath, Shanthi P., 2021. "Income Responses to the Affordable Care Act: Evidence from a Premium Tax Credit Notch," Journal of Health Economics, Elsevier, vol. 76(C).
    7. Chen, Hua & Ding, Yugang & Wang, Xiangnan & Yang, Yifei, 2023. "The effect of public insurance policy on the private insurance market: New evidence from a quasi-experiment in China," Economic Analysis and Policy, Elsevier, vol. 78(C), pages 937-953.

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