IDEAS home Printed from https://ideas.repec.org/a/tpr/amjhec/v1y2015i4p494-514.html
   My bibliography  Save this article

“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, MIT Press, vol. 1(4), pages 494-514, Fall.
    • Handle: RePEc:tpr:amjhec:v:1:y:2015:i:4:p:494-514
    as

    Download full text from publisher

    File URL: http://www.mitpressjournals.org/doi/pdf/10.1162/AJHE_a_00027
    File Function: link to full text PDF
    Download Restriction: no
    ---><---

    Other versions of this item:

    References listed on IDEAS

    as
    1. 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.
    2. Alma Cohen & Liran Einav, 2007. "Estimating Risk Preferences from Deductible Choice," American Economic Review, American Economic Association, vol. 97(3), pages 745-788, June.
    3. 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.
    4. 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.
    5. Martin B. Hackmann & Jonathan T. Kolstad & Amanda E. Kowalski, 2015. "Adverse Selection and an Individual Mandate: When Theory Meets Practice," American Economic Review, American Economic Association, vol. 105(3), pages 1030-1066, March.
    6. 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.
    7. 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.
    8. 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.
    9. 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..
    10. John A. Graves & Jonathan Gruber, 2012. "How Did Health Care Reform in Massachusetts Impact Insurance Premiums?," American Economic Review, American Economic Association, vol. 102(3), pages 508-513, May.
    11. 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.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Shelley I. White-Means & Ahmad Reshad Osmani, 2018. "Affordable Care Act and Disparities in Health Services Utilization among Ethnic Minority Breast Cancer Survivors: Evidence from Longitudinal Medical Expenditure Panel Surveys 2008–2015," IJERPH, MDPI, vol. 15(9), pages 1-26, August.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    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.
    2. Serakos Maria & Wolfe Barbara, 2016. "The ACA: Impacts on Health, Access, and Employment," Forum for Health Economics & Policy, De Gruyter, vol. 19(2), pages 201-259, December.
    3. Ellen Bouchery & Rebecca Morris & Jasmine Little, "undated". "Examining Substance Use Disorder Treatment Demand and Provider Capacity in a Changing Health Care System: Initial Findings Report," Mathematica Policy Research Reports b0d83ca544284ee7a053b2788, Mathematica Policy Research.
    4. Benjamin R. Handel & Jonathan T. Kolstad, 2021. "The Affordable Care Act After a Decade: Industrial Organization of the Insurance Exchanges," NBER Working Papers 29178, National Bureau of Economic Research, Inc.
    5. Mark Duggan & Gopi Shah Goda & Emilie Jackson, 2019. "The Effects of the Affordable Care Act on Health Insurance Coverage and Labor Market Outcomes," National Tax Journal, National Tax Association;National Tax Journal, vol. 72(2), pages 261-322, June.
    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. Christina Bradbury, 2015. "Determinants of Physicians’ Acceptance of New Medicaid Patients," Atlantic Economic Journal, Springer;International Atlantic Economic Society, vol. 43(2), pages 247-260, June.
    8. Jason Brown & Mark Duggan & Ilyana Kuziemko & William Woolston, 2014. "How Does Risk Selection Respond to Risk Adjustment? New Evidence from the Medicare Advantage Program," American Economic Review, American Economic Association, vol. 104(10), pages 3335-3364, October.
    9. 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.
    10. Huh, Jason & Reif, Julian, 2017. "Did Medicare Part D reduce mortality?," Journal of Health Economics, Elsevier, vol. 53(C), pages 17-37.
    11. Sonia Jaffe & Mark Shepard, 2017. "Price-Linked Subsidies and Health Insurance Markups," Working Papers 2017-084, Human Capital and Economic Opportunity Working Group.
    12. Maria Polyakova & Stephen P. Ryan, 2019. "Subsidy Targeting with Market Power," NBER Working Papers 26367, National Bureau of Economic Research, Inc.
    13. Sebastian Tello Trillo & Ausmita Ghosh & Kosali Simon & Johanna Catherine Maclean, 2015. "Losing Medicaid: What happens to hospitalizations?," NBER Working Papers 21580, National Bureau of Economic Research, Inc.
    14. Coleman Drake & Lucas Higuera & Fernando Alarid-Escudero & Roger Feldman, 2017. "A Kinked Health Insurance Market: Employer-Sponsored Insurance under the Cadillac Tax," American Journal of Health Economics, MIT Press, vol. 3(4), pages 455-476, Fall.
    15. Sonia P. Jaffe & Mark Shepard, 2017. "Price-Linked Subsidies and Imperfect Competition in Health Insurance," NBER Working Papers 23104, National Bureau of Economic Research, Inc.
    16. Timothy J. Layton & Randall P. Ellis & Thomas G. McGuire, 2015. "Assessing Incentives for Adverse Selection in Health Plan Payment Systems," Boston University - Department of Economics - Working Papers Series wp2015-024, Boston University - Department of Economics.
    17. Frederick, Joshua D. & Fung, Derrick W.H. & Yang, Charles C. & Yeh, Jason J.H., 2022. "Individual health insurance reforms in the U.S.: Expanding interstate markets, Medicare for all, or Medicaid for all?," European Journal of Operational Research, Elsevier, vol. 297(2), pages 753-765.
    18. Padmaja Ayyagari, 2019. "Health Insurance and Early Retirement Plans: Evidence from the Affordable Care Act," American Journal of Health Economics, University of Chicago Press, vol. 5(4), pages 533-560, Fall.
    19. Johannes Spinnewijn, 2017. "Heterogeneity, Demand for Insurance, and Adverse Selection," American Economic Journal: Economic Policy, American Economic Association, vol. 9(1), pages 308-343, February.
    20. Pelech, Daria, 2017. "Dropped out or pushed out? Insurance market exit and provider market power in Medicare Advantage," Journal of Health Economics, Elsevier, vol. 51(C), pages 98-112.

    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

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:tpr:amjhec:v:1:y:2015:i:4:p:494-514. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Kelly McDougall (email available below). General contact details of provider: https://direct.mit.edu/journals .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.