Job Market Paper

Job Market Paper

Cost-Sharing Reduction Subsidy: Who Benefits and How It Should be Financed, Evidence from California Health Exchange

With annual spending of $7 billion, the Affordable Care Act (ACA) Cost-Sharing-Reduction (CSR) subsidies offer additional benefits such as a lower deductible and a lower out-of-pocket maximum to eligible low-income enrollees who purchase any qualified plan on the exchanges. In October 2017, the government terminated the CSR payment, but still requiring insurers to offer such extra benefits. I investigate how CSR de-funding impacted insurers, consumers, and public spending. Combining individual-level claims data from a major insurer in California and individual-level enrollment data, I estimate a model of insurance demand and insurers’ competition. I find that CSR eligible households are significantly less price sensitive and more expensive for insurers to cover. Consequently, counterfactuals show that CSR de-funding discourages insurers’ on-exchange participation, and consumers are worse off due to increased net premiums.

Working Paper

Cost-sharing reduction subsidies in ACA exchanges contributed to stability of Bronze and Silver plans (prepare for submission), with Guy David, Ezra Fishman, Andrea DeVries, Jason Margus and Jennifer Kowalski

We estimated the extent to which adverse selection was present in the individual market by comparing spending among individual-market enrollees to spending among small-group enrollees insured with actuarially similar products from a large national issuer, 2014 through 2017. We found that individual-market enrollees only incurred higher spending than their small-group counterparts in plans of generous coverage, which corresponded to less than 10% of person-years of individual market enrollment. Thus, the large majority of the individual market, which is covered by Bronze and Silver products, did not experience more adverse selection than was present in the small-group market. The CSR subsidies played an important role in attracting low-risk low-income households and contribute to the stability of the individual market.

Adverse Selection in Individual Health Insurance Market (manuscript), with Guy David, Ezra Fishman, Andrea DeVries

This paper examines the adverse selection among the on-exchange insurees on two dimensions: riskier insurees’ enrollment in more generous plans, and their strategic decisions on when to enroll and how long to stay covered. We find clear evidence of adverse selection in coverage in all non-Bronze tiers in both on-exchange and small-group plans. The level of selection increases with plan generosity, and is severer among on-exchange insurees than small-group insurees across all tiers. We find no evidence of adverse selection in enrollment duration among small-group insurees. For on-exchange insurees, only those who enroll in generous plans strategically choose enrollment duration, and premium subsidy receipt significantly increases an on-exchange insuree’s probability to stay in coverage.

Work in Progress

The Trade-off Between Permanent and Temporary Nursing Staff, with Steve Schawb and Kija Korowicki