Take Action

Home | Faculty & Research Overview | Research

Research Details

More Insurers Lower Premiums: Evidence from Initial Pricing in the Health Insurance Marketplaces, American Journal of Health Economics

Abstract

First-year insurer participation in the Health Insurance Marketplaces (HIMs) established by the Affordable Care Act is limited in many areas of the country. There are 3.9 participants, on population average, in the 395 ratings areas spanning the 34 states with federally facilitated marketplaces (FFMs). Using data on the plans offered in the FFMs, together with predicted market shares for HIM participants (estimated using 2011 insurer-state market shares in the individual insurance market), we study the impact of competition on premiums. We exploit variation in ratings-area-level competition induced by United Healthcare's decision not to participate in any of the FFMs. We estimate that the second-lowest-price silver premium (which is directly linked to federal subsidies) would have decreased by 5.4 percent, on average, had United Healthcare participated. If all insurers active in each state’s individual insurance market in 2011 had participated in all ratings areas in that state's HIM, we estimate this key premium would be 11.1% lower and 2014 federal subsidies would be reduced by $1.7 billion.

Type

Article

Author(s)

Leemore S. Dafny, Jonathan Gruber, Christopher Ody

Date Published

2015

Citations

Dafny, S. Leemore, Jonathan Gruber, and Christopher Ody. 2015. More Insurers Lower Premiums: Evidence from Initial Pricing in the Health Insurance Marketplaces. American Journal of Health Economics. 1(1): 53-81.

KELLOGG INSIGHT

Explore leading research and ideas

Find articles, podcast episodes, and videos that spark ideas in lifelong learners, and inspire those looking to advance in their careers.
learn more

COURSE CATALOG

Review Courses & Schedules

Access information about specific courses and their schedules by viewing the interactive course scheduler tool.
LEARN MORE

DEGREE PROGRAMS

Discover the path to your goals

Whether you choose our Full-Time, Part-Time or Executive MBA program, you’ll enjoy the same unparalleled education, exceptional faculty and distinctive culture.
learn more

Take Action