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

We study age-rating restrictions in the health insurance marketplaces introduced by the Affordable Care Act. Because most buyers are subsidized, although age-rating restrictions affect pre-subsidy premiums, participation is primarily driven by subsidy generosity rather than pricing decisions. Combining pre and post-reform data on prices and enrollment we find that age-rating restrictions altered pre-subsidy premiums: +$230/year for under-50 buyers and -$900/year for over-50 buyers. Accounting for the ACA subsidy design, this regulation decreased federal spending by more than 10%, and reduced participation by 2% (-4% among under-50, +2% among over-50). These effects differ across regions, varying with the age-composition of the uninsured.

Authors: 
Pietro Tebladi, University of Chicago
Joe Orsini, Nuna Health
Publication Date: 
July, 2017
BFI Initiative: 
Publication Status: 
Document Number: 
Health Economics Series No. 2017-02
File Description: 
June 2017 version