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How does expansion of public health insurance affect risk pools and premiums in the market for private health insurance? Evidence from Medicaid and the Affordable Care Act Marketplaces

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  • Aditi P. Sen
  • Thomas DeLeire

Abstract

Private insurance market risk pools are likely to be directly affected by expansions of public insurance, in turn affecting premiums. We investigate the effects of Medicaid expansion on private health insurance markets using data on the plans offered through the health insurance “Marketplaces” (also known as Exchanges) established by the Affordable Care Act. We employ geographic matching to compare premiums for private plans in neighboring counties that straddle expansion and nonexpansion states and find that premiums of Marketplace plans are 11% lower in Medicaid expansion states, controlling for demographic and health characteristics as well as measures of health care access. These results are consistent with evidence on the composition of the private insurance risk pool in expansion versus nonexpansion states and associated differences in expected health spending.

Suggested Citation

  • Aditi P. Sen & Thomas DeLeire, 2018. "How does expansion of public health insurance affect risk pools and premiums in the market for private health insurance? Evidence from Medicaid and the Affordable Care Act Marketplaces," Health Economics, John Wiley & Sons, Ltd., vol. 27(12), pages 1877-1903, December.
  • Handle: RePEc:wly:hlthec:v:27:y:2018:i:12:p:1877-1903
    DOI: 10.1002/hec.3809
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    References listed on IDEAS

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    1. Amanda Kowalski, 2014. "The Early Impact of the Affordable Care Act, State by State," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 45(2 (Fall)), pages 277-355.
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    Cited by:

    1. 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.
    2. Guangsheng Wan & Zixuan Peng & Yufeng Shi & Peter C. Coyte, 2020. "What Are the Determinants of the Decision to Purchase Private Health Insurance in China?," IJERPH, MDPI, vol. 17(15), pages 1-15, July.
    3. Lizhong Peng & Xiaohui Guo & Chad D. Meyerhoefer, 2020. "The effects of Medicaid expansion on labor market outcomes: Evidence from border counties," Health Economics, John Wiley & Sons, Ltd., vol. 29(3), pages 245-260, March.
    4. Naoki Aizawa & You Suk Kim, 2020. "Public and Private Provision of Information in Market-Based Public Programs: Evidence from Advertising in Health Insurance Marketplaces," NBER Working Papers 27695, National Bureau of Economic Research, Inc.
    5. Ding, Hui & Chen, Yiwei & Yu, Min & Zhong, Jieming & Hu, Ruying & Chen, Xiangyu & Wang, Chunmei & Xie, Kaixu & Eggleston, Karen, 2021. "The Effects of Chronic Disease Management in Primary Health Care: Evidence from Rural China," Journal of Health Economics, Elsevier, vol. 80(C).
    6. Curto, Vilsa E., 2023. "Pricing regulations in individual health insurance: Evidence from Medigap," Journal of Health Economics, Elsevier, vol. 91(C).
    7. Daniel W. Sacks & Khoa Vu & Tsan‐Yao Huang & Pinar Karaca‐Mandic, 2021. "How do insurance firms respond to financial risk sharing regulations? Evidence from the Affordable Care Act," Health Economics, John Wiley & Sons, Ltd., vol. 30(6), pages 1443-1460, June.
    8. Reagan A. Baughman, 2022. "The Affordable Care Act and regulation: Coverage effects of guaranteed issue and ratings reform," Health Economics, John Wiley & Sons, Ltd., vol. 31(12), pages 2575-2592, December.

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