Subsidies and the demand for individual health insurance in California

Factors influencing individuals' take-up of tax-subsidized private health insurance: a cross-sectional study in China

Aims: To identify factors influencing individuals' take-up of tax-subsidized private health insurance.Methods: A self-administered questionnaire survey was conducted to collect data in Hangzhou, China. A logistic regression analysis was applied to find factors influencing individuals' take-up of tax-subsidized private health insurance.Results: A total of 1,610 participants joined the survey, and 1,543 valid cases were obtained. The logistic regression results showed that educational level, marital status, the number of elderly people to support, types of basic medical insurance covered, disease history, reimbursement rate of outpatient visits, reimbursement rate of inpatient visits, knowledge of tax-subsidized private health insurance, and ratio of the deduction to income influenced individuals' take-up of tax-subsidized private health insurance.Limitations: Sample representativeness may be sacrificed by the fact that the data were collected from one city (Hangzhou) in a cross-sectional investigation.Conclusions: Demographic variables, such as educational level, marital status, and the number of elderly people to support, have an impact on individuals' take-up of tax-subsidized private health insurance, while age and gender are not significant. People with disease history are more likely to take out tax-subsidized private health insurance. The ratio of deduction to income is positively correlated with the take-up of tax-subsidized private health insurance. Suggestions, such as strengthening the publicity of tax-subsidized private health insurance, increasing the deduction amount, and encouraging employers to provide tax-subsidized private health insurance for employees' families are provided with the hope to promote the development of tax-subsidized private health insurance in China.

Demand for health insurance: Evidence from the California and Washington ACA exchanges

I estimate demand for health insurance using consumer-level data from the California and Washington ACA exchanges. I use the demand estimates to simulate the impact of policies targeting adverse selection, including subsidies and the individual mandate. I find (1) own-premium elasticities of -7.2 to -10.6 and insurance coverage elasticities of -1.1 to -1.2; (2) limited response to the mandate penalty amount, but significant response to the penalty's existence, suggesting consumers have a "taste for compliance"; (3) mandate repeal slightly increases consumer surplus because the ACA's price-linked subsidies shield most consumers from premium increases resulting from repeal and some consumers are not compelled to purchase insurance against their will; and (4) mandate repeal decreases consumer surplus if ACA subsidies are replaced with vouchers that expose consumers to premium increases. The economic rationale for the mandate depends on the extent of adverse selection and the presence of other policies targeting selection.

Medicaid Versus Marketplace Coverage For Near-Poor Adults: Effects On Out-Of-Pocket Spending And Coverage

In states that expanded Medicaid eligibility under the Affordable Care Act, nonelderly near-poor adults-those with family incomes of 100-138 percent of the federal poverty level-are generally eligible for Medicaid, with no premiums and minimal cost sharing. In states that did not expand eligibility, these adults may qualify for premium tax credits to purchase Marketplace plans that have out-of-pocket premiums and cost-sharing requirements. We used data for 2010-15 to estimate the effects of Medicaid expansion on coverage and out-of-pocket expenses, compared to the effects of Marketplace coverage. For adults with family incomes of 100-138 percent of poverty, living in a Medicaid expansion state was associated with a 4.5-percentage-point reduction in the probability of being uninsured, a $344 decline in average total out-of-pocket spending, a 4.1-percentage-point decline in high out-of-pocket spending burden (that is, spending more than 10 percent of income), and a 7.7-percentage-point decline in the probability of having any out-of-pocket spending relative to living in a nonexpansion state. These findings suggest that policies that substitute Marketplace for Medicaid eligibility could lower coverage rates and increase out-of-pocket expenses for enrollees.

Price and the Demand for Nongroup Health Insurance

In light of recent interest in tax credits and other price-based incentives to stimulate the purchase of insurance, this study estimates the price elasticity of demand for nongroup health insurance for single workers without access to employer-sponsored insurance. Our premium measure explicitly accounts for two components that have not been examined in previous studies: 1) health status, and 2) the effect of state-level premium rating regulations. We estimate a price elasticity of –.59, which, given the low rate of initial coverage in our sample (16.4%), translates to a small effect on the uninsured.

Health insurance tax credits, the earned income tax credit, and health insurance coverage of single mothers

The Omnibus Budget Reconciliation Act of 1990 enacted a refundable tax credit for low-income working families who purchased health insurance coverage for their children. This health insurance tax credit (HITC) existed during tax years 1991, 1992, and 1993, and was then rescinded. A difference-in-differences estimator applied to Current Population Survey data suggests that adoption of the HITC, along with accompanying increases in the Earned Income Tax Credit (EITC), was associated with a relative increase of about 4.7 percentage points in the private health insurance coverage of working single mothers with high school or less education. Also, a difference-in-difference-in-differences estimator, which attempts to net out the possible influence of the EITC increases but which requires strong assumptions, suggests that the HITC was responsible for about three-quarters (3.6 percentage points) of the total increase. The latter estimate implies a price elasticity of health insurance take-up of -0.42.

Tax incentives as a solution to the uninsured: evidence from the self-employed

Between 1996 and 2003, a series of amendments were made to the Tax Reform Act of 1986 that gradually increased the tax deduction for health insurance purchases by the self-employed (SE) from 25 to 100 percent. We study how these changes have influenced the likelihood that a SE person has health insurance coverage as the policyholder. The Current Population Survey is used to construct a data set corresponding to 1995-2005. Both the difference-in-differences and price elasticity of demand estimates suggest that the series of tax deductions did not provide sufficient incentives for the SE to obtain health insurance coverage.

Do increased premium subsidies affect how much health insurance is purchased? Evidence from the self-employed

This paper estimates the effect of recent federal and state level increases in the deductibility of health insurance premiums for self-employed individuals, which reduced the after-tax price of health insurance, on both the take-up of coverage and the amount of insurance purchased. Using a panel of tax returns filed by self-employed taxpayers from 1999 to 2004, we estimate a take-up elasticity of -0.316 overall, with significantly higher elasticities for single taxpayers. On the intensive margin, we find an elasticity of -0.733 overall.

Premium increases in state health insurance programs: lessons from a case study of the Massachusetts Medicaid buy-in program

In March 2003, Massachusetts increased the premiums it charges to most enrollees in its CommonHealth-Working (CH-W) program. This study evaluates the impact of the premium change on disenrollment using a comparison group methodology. The findings indicate that the premium change had only a small, but statistically significant impact on program exits. The CH-W experience differs from other state programs that saw substantial enrollment declines in response to new or increased premiums. This is likely due to factors that make CH-W different from other programs, key of which are administrative procedures intended to minimize disenrollment due to premium nonpayment.

The role of product design in consumers' choices in the individual insurance market

OBJECTIVE

To evaluate the role of health plan benefit design and price on consumers' decisions to purchase health insurance in the nongroup market and their choice of plan.

DATA SOURCES AND STUDY SETTING

Administrative data from the three largest nongroup insurers in California and survey data about those insured in the nongroup market and the uninsured in California.

STUDY DESIGN

We fit a nested logit model to examine the effects of plan characteristics on consumer choice while accounting for substitutability among certain groups of products.

PRINCIPAL FINDINGS

Product choice is quite sensitive to price. A 10 percent decrease in the price of a product would increase its market share by about 20 percent. However, a 10 percent decrease in prices of all products would only increase overall market participation by about 4 percent. Changes in the generosity of coverage will also affect product choice, but have only small effects on overall participation. A 20 percent decrease in the deductible or maximum out-of-pocket payment of all plans would increase participation by about 0.3-0.5 percent. Perceived information search costs and other nonprice barriers have substantial effects on purchase of nongroup coverage.

CONCLUSIONS

Modest subsidies will have small effects on purchase in the nongroup market. New product designs with higher deductibles are likely to be more attractive to healthy purchasers, but the new benefit designs are likely to have only small effects on market participation. In contrast, consumer education efforts have a role to play in helping to expand coverage.

Individual health insurance within the family: can subsidies promote family coverage?

This paper examines the role of price in health insurance coverage decisions within the family to guide policy in promoting whole family coverage. We analyze the factors that affect individual health insurance coverage among families, and explore family decisions about whom to cover and whom to leave uninsured. The analysis uses household data from California combined with abstracted individual health plan benefit and premium data. We find that premium subsidies for individual insurance would increase family coverage; however, their effect likely would be small relative to their implementation cost.

Consumer Decision Making In The Individual Health Insurance Market

This paper summarizes the results from a study of consumer decision making in California's individual health insurance market. We conclude that price subsidies will have only modest effects on participation and that efforts to reduce nonprice barriers might be just as effective. We also find that there is substantial pooling in the individual market and that it increases over time because people who become sick can continue coverage without new underwriting. Finally, we show that people prefer more-generous benefits and that it is difficult to induce people in poor health to enroll in high-deductible health plans.

The Role Of The Individual Health Insurance Market And Prospects For Change

The individual market is the only source of health insurance for the more than 20 percent of Americans not eligible for group or public health insurance; yet participation rates are low and shrinking. This paper examines this market's structural features and assesses the likelihood that it will play an expanded role in the future. We describe how pressures such as cost growth, new technologies, and changes in the nature of the workplace are shaping the individual market. We conclude that the future of the market will depend largely on whether there are policy interventions that balance the problems of affordability, risk sharing, and adverse selection.