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The Early Impact of the Affordable Care Act State-By-State

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Abstract
I examine the impact of state policy decisions on the early impact of the ACA using data through the first half of 2014. I focus on the individual health insurance market, which includes plans purchased through exchanges as well as plans purchased directly from insurers. In this market, at least 13.2 million people were covered in the second quarter of 2014, representing an increase of at least 4.2 million beyond pre-ACA state-level trends. I use data on coverage, premiums, and costs and a model developed by Hackmann, Kolstad, and Kowalski (2013) to calculate changes in selection and markups, which allow me to estimate the welfare impact of the ACA on participants in the individual health insurance market in each state. I then focus on comparisons across groups of states. The estimates from my model imply that market participants in the five "direct enforcement" states that ceded all enforcement of the ACA to the federal government are experiencing welfare losses of approximately $245 per participant on an annualized basis, relative to participants in all other states. They also imply that the impact of setting up a state exchange depends meaningfully on how well it functions. Market participants in the six states that had severe exchange glitches are experiencing welfare losses of approximately $750 per participant on an annualized basis, relative to participants in other states with their own exchanges. Although the national impact of the ACA is likely to change over the course of 2014 as coverage, costs, and premiums evolve, I expect that the differential impacts that we observe across states will persist through the rest of 2014.

Suggested Citation

  • Amanda E. Kowalski, 2014. "The Early Impact of the Affordable Care Act State-By-State," Cowles Foundation Discussion Papers 1959, Cowles Foundation for Research in Economics, Yale University.
    • Handle: RePEc:cwl:cwldpp:1959
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    Cited by:

    1. 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.
    2. Charles Courtemanche & James Marton & Benjamin Ukert & Aaron Yelowitz & Daniela Zapata, 2018. "Early Effects of the Affordable Care Act on Health Care Access, Risky Health Behaviors, and Self‐Assessed Health," Southern Economic Journal, John Wiley & Sons, vol. 84(3), pages 660-691, January.
    3. 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.
    4. Sinaiko, Anna & Zeckhauser, Richard, 2016. "Enrollee Choices after Their Health Plans Are Terminated: Default Effects versus Persistent Preferences," Working Paper Series rwp16-055, Harvard University, John F. Kennedy School of Government.
    5. Jacqueline Fiore, 2017. "The Impact of the Affordable Care Act's Medicaid Expansion on Medicaid Spending by Health Care Service Category," Working Papers 1706, Tulane University, Department of Economics, revised Mar 2018.
    6. 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.
    7. Chao Fu & Naoki Aizawa, 2017. "Local Market Equilibrium and the Design of Public Health Insurance System," 2017 Meeting Papers 1448, Society for Economic Dynamics.
    8. Maria Polyakova & Stephen P. Ryan, 2019. "Subsidy Targeting with Market Power," NBER Working Papers 26367, National Bureau of Economic Research, Inc.
    9. N. Bora Keskin & John R. Birge, 2019. "Dynamic Selling Mechanisms for Product Differentiation and Learning," Operations Research, INFORMS, vol. 67(4), pages 1069-1089, July.
    10. Naoki Aizawa & Chao Fu, 2020. "Interaction of the Labor Market and the Health Insurance System: Employer-Sponsored, Individual, and Public Insurance," NBER Working Papers 26713, National Bureau of Economic Research, Inc.
    11. Charles Courtemanche & James Marton & Benjamin Ukert & Aaron Yelowitz & Daniela Zapata, 2019. "Effects of the Affordable Care Act on Health Behaviors After 3 Years," Eastern Economic Journal, Palgrave Macmillan;Eastern Economic Association, vol. 45(1), pages 7-33, January.
    12. 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.
    13. Charles Courtemanche & James Marton & Benjamin Ukert & Aaron Yelowitz & Daniela Zapata, 2016. "Impacts of the Affordable Care Act on Health Insurance Coverage in Medicaid Expansion and Non-Expansion States," NBER Working Papers 22182, National Bureau of Economic Research, Inc.
    14. Michael Geruso & Timothy J. Layton, 2017. "Selection in Health Insurance Markets and Its Policy Remedies," Journal of Economic Perspectives, American Economic Association, vol. 31(4), pages 23-50, Fall.
    15. Patricia H. Born & E. Tice Sirmans, 2020. "Restrictive Rating and Adverse Selection in Health Insurance," Journal of Risk & Insurance, The American Risk and Insurance Association, vol. 87(4), pages 919-933, December.
    16. Brett Lissenden, 2017. "Three's a Crowd? The Effect of Insurer Participation on Premiums and Cost-Sharing Parameters in the Initial Years of the ACA Marketplaces," American Journal of Health Economics, MIT Press, vol. 3(4), pages 477-506, Fall.
    17. 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.
    18. Courtemanche, Charles & Marton, James & Ukert, Benjamin & Yelowitz, Aaron & Zapata, Daniela, 2018. "Effects of the Affordable Care Act on Health Behaviors after Three Years," IZA Discussion Papers 11468, Institute of Labor Economics (IZA).
    19. Amanda E. Kowalski, 2015. "What Do Longitudinal Data on Millions of Hospital Visits Tell Us about the Value of Public Health Insurance as a Safety Net for the Young and Privately Insured"," Cowles Foundation Discussion Papers 1983, Cowles Foundation for Research in Economics, Yale University.
    20. Owen (O.A.) O'Donnell, 2019. "Financial Protection Against Medical Expense," Tinbergen Institute Discussion Papers 19-010/V, Tinbergen Institute.
    21. Liran Einav & Amy Finkelstein, 2023. "Empirical analyses of selection and welfare in insurance markets: a self-indulgent survey," The Geneva Risk and Insurance Review, Palgrave Macmillan;International Association for the Study of Insurance Economics (The Geneva Association), vol. 48(2), pages 167-191, September.

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    More about this item

    Keywords

    Health reform; Adverse selection; Markups; Direct enforcement; Exchange; Community rating; Guaranteed issue;
    All these keywords.

    JEL classification:

    • H75 - Public Economics - - State and Local Government; Intergovernmental Relations - - - State and Local Government: Health, Education, and Welfare
    • I11 - Health, Education, and Welfare - - Health - - - Analysis of Health Care Markets

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