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Impact of Premium Subsidies on the Take-up of Health Insurance: Evidence from the 2009 American Recovery and Reinvestment Act (ARRA)

Author

Listed:
  • Asako S. Moriya

    (Center for Financing, Access, and Cost Trends, Agency for Healthcare Research and Quality (AHRQ). This work was done while the corresponding author was a postdoctoral fellow at SPEA, Indiana University)

  • Kosali Simon

    (School of Public and Environmental Affairs (SPEA), Indiana University, and NBER)

Abstract

We study the coverage impacts of a 65 percent health insurance premium subsidy that targeted employer-insured workers who lost their jobs between September 2008 and May 2010. Our research represents the first econometric analysis of the American Recovery and Reinvestment Act (ARRA) COBRA subsidy and contributes to a better understanding of consumer responses to government-subsidized private health insurance and discussions surrounding Affordable Care Act (ACA) policies. Using data from the Survey of Income and Program Participation (SIPP) and a difference-in-differences estimation strategy, we find that the subsidy is associated with a substantial increase in own-name employer coverage among the targeted group. We estimate a −0.38 to −0.27 price elasticity of demand for health insurance, depending on the specification. This suggests that consumers are somewhat more price sensitive than previously thought, although there are caveats to generalizing from past settings to individuals affected by ACA subsidies. We also find that part of the increase in subsidized coverage was offset by a decrease in unsubsidized non-group insurance.

Suggested Citation

  • Asako S. Moriya & Kosali Simon, 2016. "Impact of Premium Subsidies on the Take-up of Health Insurance: Evidence from the 2009 American Recovery and Reinvestment Act (ARRA)," American Journal of Health Economics, MIT Press, vol. 2(3), pages 318-343, Summer.
    • Handle: RePEc:tpr:amjhec:v:2:y:2016:i:3:p:318-343
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    Citations

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    Cited by:

    1. Pichler, Stefan & Ziebarth, Nicolas R., 2024. "Sick Leave and Medical Leave in the United States: A Categorization and Recent Trends," IZA Policy Papers 206, Institute of Labor Economics (IZA).
    2. David M. Zimmer, 2022. "Did subsidies included in the 2009 Stimulus Package encourage enrolment in COBRA?," Fiscal Studies, John Wiley & Sons, vol. 43(4), pages 405-419, December.
    3. Li, Xiaoxue & Ye, Jinqi, 2017. "The spillover effects of health insurance benefit mandates on public insurance coverage: Evidence from veterans," Journal of Health Economics, Elsevier, vol. 55(C), pages 45-60.
    4. Jesse M. Hinde, 2017. "Incentive(less)? The Effectiveness of Tax Credits and Cost-Sharing Subsidies in the Affordable Care Act," American Journal of Health Economics, MIT Press, vol. 3(3), pages 346-369, Summer.
    5. Kaufmann, Cornel & Schmid, Christian & Boes, Stefan, 2017. "Health insurance subsidies and deductible choice: Evidence from regional variation in subsidy schemes," Journal of Health Economics, Elsevier, vol. 55(C), pages 262-273.

    More about this item

    Keywords

    insurance subsidy; price elastic of insurance demand; COBRA;
    All these keywords.

    JEL classification:

    • I13 - Health, Education, and Welfare - - Health - - - Health Insurance, Public and Private
    • J64 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Unemployment: Models, Duration, Incidence, and Job Search

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