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Group Health Insurance Versus ACA Marketplaces: Selection, Subsidies, and Welfare

Author

Listed:
  • Sebastián Fleitas
  • Caitlyn Fleming
  • Gautam Gowrisankaran
  • Anthony T. Lo Sasso

Abstract

The Affordable Care Act (ACA) changed incentives for individual and employer-sponsored insurance. Using unique small group market (SGM) data with detailed claims and enrollment information, we analyze the welfare gains across households in the SGM from alternative formulations of ACA health insurance exchanges (HIXs). Accounting for observable heterogeneity increases estimated demand elasticities. Shutting down the SGM would reduce equilibrium adverse selection in HIX-type markets, increasing welfare for households moved to HIXs by $842 annually. The majority of households would obtain higher equilibrium welfare from HIXs, stemming from having more choices. Adding the 2014 ACA penalties only modestly decreases adverse selection.

Suggested Citation

  • Sebastián Fleitas & Caitlyn Fleming & Gautam Gowrisankaran & Anthony T. Lo Sasso, 2025. "Group Health Insurance Versus ACA Marketplaces: Selection, Subsidies, and Welfare," NBER Working Papers 33938, National Bureau of Economic Research, Inc.
    • Handle: RePEc:nbr:nberwo:33938
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    More about this item

    JEL classification:

    • H30 - Public Economics - - Fiscal Policies and Behavior of Economic Agents - - - General
    • I13 - Health, Education, and Welfare - - Health - - - Health Insurance, Public and Private
    • L11 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Production, Pricing, and Market Structure; Size Distribution of Firms

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