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Insurance Without Commitment: Evidence from the ACA Marketplaces

NBER Working Paper No. w24668
2018
  • 0
    Citations
  • 660
    Usage
  • 1
    Captures
  • 0
    Mentions
  • 0
    Social Media
Metric Options:   Counts1 Year3 Year

Metrics Details

  • Usage
    660
    • Abstract Views
      611
    • Downloads
      49
  • Captures
    1
    • Readers
      1
      • SSRN
        1

Paper Description

We study the dynamics of participation and health care consumption in the Affordable Care Act’s health insurance marketplaces. Unlike other health insurance contexts, we find individuals commonly drop coverage midyear–roughly 30% of enrollees exit within nine months of sign-up. While covered, dropouts spend more on health care than in the months before sign-up or after exit. We model the consequences of drop-out on equilibrium premiums and consumer welfare. While dropouts generate a type of adverse selection, the welfare effect from their participation is ambiguous and depends on the relative costs per month of part-year vs. full-year enrollees. In our empirical setting, we find that imposing a penalty that incentivizes participation for at least 3.5 months would lower premium levels and improve overall consumer welfare.

Bibliographic Details

Rebecca Diamond; Michael Dickstein; Timothy McQuade; Petra Persson

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