Lessons Learned From the Affordable Care Act: The Premium Subsidy Design May Promote Adverse Selection

Ilana Graetz, Caitlin N. McKillop, Cameron M. Kaplan, Teresa M. Waters

Research output: Contribution to journalArticlepeer-review

8 Scopus citations

Abstract

Since 2014, average premiums for health plans available in the Affordable Care Act marketplaces have increased. We examine how premium price changes affected the amount consumers pay after subsidies for the lowest-cost bronze and silver plans available by age in the federally facilitated exchanges. Between 2015 and 2016, benchmark plan premiums increased in 83.3% of counties. Overall, rising benchmark premiums were associated with lower average after-subsidy premiums for the lowest-cost bronze and silver plans for older subsidy-eligible adults, but with higher after-subsidy premiums for younger adults purchasing the same plans, regardless of income. With recent discussions to replace or overhaul the Affordable Care Act, it is critical that we learn from the successes and failures of the current policy. Our findings suggest that the subsidy design, which makes rising premiums costlier for younger adults looking to purchase an entry-level plan, may be contributing to adverse selection and instability in the marketplace.

Original languageEnglish
Pages (from-to)762-772
Number of pages11
JournalMedical Care Research and Review
Volume75
Issue number6
DOIs
StatePublished - Dec 1 2018

Bibliographical note

Publisher Copyright:
© The Author(s) 2017.

Keywords

  • Patient Protection and Affordable Care Act
  • health insurance exchanges
  • insurance pools

ASJC Scopus subject areas

  • Health Policy

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