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"Sticker Shock" in Individual Insurance under Health Reform?

Author

Listed:
  • Mark Pauly

    (University of Pennsylvania)

  • Scott Harrington

    (University of Pennsylvania)

  • Adam Leive

    (University of Pennsylvania)

Abstract
We provide estimates of changes in the annual expected price for insured medical care—defined as the sum of premiums and expected out-of-pocket payments—after the Affordable Care Act (ACA) among consumers who previously bought individual insurance. Using the best available data from the Current Population Survey (CPS) and the Medical Expenditure Panel Survey (MEPS), we find that average prices did not increase substantially in California and in states with federally run exchanges. Our central estimates based on MEPS data on out-of-pocket payments suggest that average prices would not change significantly if the lowest-priced Bronze plan were selected, whereas prices would increase from 8 to 15 percent if the second-lowest-priced Silver plan were selected. (Alternative estimates using CPS data on out-of-pocket spending suggest somewhat higher price increases.) Potentially offsetting changes in the risk premium associated with moving from pre-reform coverage to either Bronze or Silver coverage are estimated to be generally small for younger buyers, but offset price increases for some older buyers, especially older women.

Suggested Citation

  • Mark Pauly & Scott Harrington & Adam Leive, 2015. ""Sticker Shock" in Individual Insurance under Health Reform?," American Journal of Health Economics, University of Chicago Press, vol. 1(4), pages 494-514, Fall.
    • Handle: RePEc:ucp:amjhec:v:1:y:2015:i:4:p:494-514
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    File URL: https://www.journals.uchicago.edu/doi/pdf/10.1162/AJHE_a_00027
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    References listed on IDEAS

    as
    1. Leemore Dafny & Jonathan Gruber & Christopher Ody, 2015. "More Insurers Lower Premiums: Evidence from Initial Pricing in the Health Insurance Marketplaces," American Journal of Health Economics, MIT Press, vol. 1(1), pages 53-81, Winter.
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    6. 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.
    7. Depew, Briggs & Bailey, James, 2015. "Did the Affordable Care Act's dependent coverage mandate increase premiums?," Journal of Health Economics, Elsevier, vol. 41(C), pages 1-14.
    8. Congressional Budget Office, 2014. "Updated Estimates of the Effects of the Insurance Coverage Provisions of the Affordable Care Act, April 2014," Reports 45231, Congressional Budget Office.
    9. Congressional Budget Office, 2014. "Updated Estimates of the Effects of the Insurance Coverage Provisions of the Affordable Care Act, April 2014," Reports 45231, Congressional Budget Office.
    10. Leemore Dafny & Jonathan Gruber & Christopher Ody, 2015. "More Insurers Lower Premiums: Evidence from Initial Pricing in the Health Insurance Marketplaces," American Journal of Health Economics, University of Chicago Press, vol. 1(1), pages 53-81, Winter.
    11. Ehrlich, Isaac & Becker, Gary S, 1972. "Market Insurance, Self-Insurance, and Self-Protection," Journal of Political Economy, University of Chicago Press, vol. 80(4), pages 623-648, July-Aug..
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    Cited by:

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    More about this item

    Keywords

    American; health; health economics; health policy; incentives; health behaviors; health care; insurance coverage; individual consumer; younger buyers; older buyers; pre-reform; price increases; California;
    All these keywords.

    JEL classification:

    • I32 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - Measurement and Analysis of Poverty
    • I13 - Health, Education, and Welfare - - Health - - - Health Insurance, Public and Private
    • I14 - Health, Education, and Welfare - - Health - - - Health and Inequality
    • I11 - Health, Education, and Welfare - - Health - - - Analysis of Health Care Markets
    • I18 - Health, Education, and Welfare - - Health - - - Government Policy; Regulation; Public Health

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