Panel Paper: Revisiting the Affordable Care Act’s Tax Credits and Cost-Sharing Subsidies: A Four-Year Follow-up on the Incentives to Purchase Individual Health Insurance

Saturday, November 9, 2019
I.M Pei Tower: Terrace Level, Terrace (Sheraton Denver Downtown)

*Names in bold indicate Presenter

Jesse Hinde, RTI International, Inc.

In 2014, the Patient Protection and Affordable Care Act provided a heterogenous set of incentives to purchase health insurance in the individual market. Consumers with incomes at 100% of the federal poverty level (FPL) gain eligibility for substantial premium tax credits and cost-sharing reductions, lose eligibility for cost-sharing reductions at 250% FPL, and lose eligibility for premium tax credits at 400% FPL. Prior work focusing on 2014 found that consumers were highly responsive to the substantial incentives at the lowest FPL thresholds and responsive mainly in Medicaid expansion states. Since 2014, the ACA exchanges have experienced dynamic changes and this study assesses changes in the effects of the Marketplace subsidies on insurance coverage as the ACA Marketplace premiums and regulations have evolved across states. Using the Current Population Survey and a regression discontinuity design, the study identifies the effect of the subsidies at three eligibility thresholds where the subsidy structure changes discretely. I also incorporate dynamic information on premium prices and changes in state policy to test for underlying mechanisms driving changes in coverage. Preliminary analyses indicate that the response at the 138% FPL cutoff have attenuated across time in Medicaid expansion states potentially due to a crowding out effect. In non-expansion states, small increase in insurance coverage occur across time at 100% FPL. There is also new evidence of a small shift in insurance coverage near 400% FPL in states running their own exchange, potentially highlighting the role of the individual mandate and increasing premiums.