Becker Friedman Institute
for Research in Economics
The University of Chicago

Research. Insights. Impact. Advancing the Legacy of Chicago Economics.

health reform

Estimating Equilibrium in Health Insurance Exchanges: Price Competition and Subsidy Design under the ACA

Pietro Tebaldi

To design premium subsidies in a health insurance market it is necessary to estimate consumer demand, cost, and study how different subsidy schemes affect insurer's incentives. I combine data on household-level enrollment and plan-level claims from the California Affordable Care Act insurance exchange with a model of insurance demand and insurers' competition to assess equilibrium outcomes under alternative subsidy designs. I estimate that younger households are significantly more price sensitive and cheaper to cover.

Regulated Age-based Pricing in Subsidized Health Insurance: Evidence from the Affordable Care Act

Pietro Tebaldi, Joe Orsini

We study age-rating restrictions in the health insurance marketplaces introduced by the Affordable Care Act. Although age-rating restrictions affect pre-subsidy premiums, participation is primarily driven by subsidy generosity rather than pricing decisions because most buyers are subsidized. By combining pre- and post-reform data on prices and enrollment, we find that age-rating restrictions alter pre-subsidy premiums, with an increase of $230 per year for buyers under 50 years old and a decrease of $900 per year for buyers over 50.