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How Do Low-Income Enrollees in the Affordable Care Act Marketplaces Respond to Cost-Sharing?

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  • Lavetti, Kurt

    (Ohio State University)

  • DeLeire, Thomas

    (Georgetown University)

  • Ziebarth, Nicolas R.

    (ZEW)

Abstract

The ACA requires insurers to provide cost-sharing reductions (CSRs) to low-income consumers on the marketplaces. We link 2013-2015 All-Payer Claims Data to 2004-2013 administrative hospital discharge data from Utah and exploit policy-driven differences in the value of CSRs that are solely determined by income. We find that enrollees with lower cost sharing have higher levels of health care spending, controlling for past health care use. We estimate the demand elasticity of total health care spending to be -0.10, but find larger elasticities for emergency room care, lifestyle drugs, and low-value care. We also find positive cross-price elasticities between outpatient and inpatient care.

Suggested Citation

  • Lavetti, Kurt & DeLeire, Thomas & Ziebarth, Nicolas R., 2019. "How Do Low-Income Enrollees in the Affordable Care Act Marketplaces Respond to Cost-Sharing?," IZA Discussion Papers 12731, Institute of Labor Economics (IZA).
    • Handle: RePEc:iza:izadps:dp12731
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    Cited by:

    1. Soheil Ghili & Ben Handel & Igal Hendel & Michael D. Whinston, 2019. "Optimal Long-Term Health Insurance Contracts: Characterization, Computation, and Welfare Effects," Cowles Foundation Discussion Papers 2218R, Cowles Foundation for Research in Economics, Yale University, revised Jul 2020.
    2. Soheil Ghili & Ben Handel & Igal Hendel & Michael D. Whinston, 2019. "The Welfare Effects of Long-Term Health Insurance Contracts," Cowles Foundation Discussion Papers 2218, Cowles Foundation for Research in Economics, Yale University.
    3. 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.
    4. Soheil Ghili & Ben Handel & Igal Hendel & Michael D. Whinston, 2019. "Optimal Long-Term Health Insurance Contracts: Characterization, Computation, and Welfare Effects," Cowles Foundation Discussion Papers 2218R2, Cowles Foundation for Research in Economics, Yale University, revised May 2021.

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    More about this item

    Keywords

    demand elasticities; health insurance; moral hazard; ACA; marketplaces; AV-variants; low-value care; lifestyle drugs; value-based CSRs; Utah;
    All these keywords.

    JEL classification:

    • H24 - Public Economics - - Taxation, Subsidies, and Revenue - - - Personal Income and Other Nonbusiness Taxes and Subsidies
    • H41 - Public Economics - - Publicly Provided Goods - - - Public Goods
    • H43 - Public Economics - - Publicly Provided Goods - - - Project Evaluation; Social Discount Rate
    • H51 - Public Economics - - National Government Expenditures and Related Policies - - - Government Expenditures and Health
    • I11 - Health, Education, and Welfare - - Health - - - Analysis of Health Care Markets
    • I18 - Health, Education, and Welfare - - Health - - - Government Policy; Regulation; Public Health
    • J32 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Nonwage Labor Costs and Benefits; Retirement Plans; Private Pensions
    • J33 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Compensation Packages; Payment Methods
    • J68 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Public Policy

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