Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/280989 
Year of Publication: 
2023
Series/Report no.: 
ZEW Discussion Papers No. 23-049
Publisher: 
ZEW - Leibniz-Zentrum für Europäische Wirtschaftsforschung, Mannheim
Abstract: 
The Affordable Care Act requires insurers to offer cost sharing reductions (CSRs) to low-income consumers on the Marketplaces. We link 2013-2015 All-Payer Claims Data to 2004-2013 administrative hospital discharge data from Utah and exploit policy-driven differences in the actuarial value of CSR plans that are solely determined by income. This allows us to examine the effect of cost sharing on medical spending among low-income individuals. We find that enrollees facing lower levels of cost sharing have higher levels of health care spending, controlling for past health care use. We estimate demand elasticities of total health care spending among this low-income population of approximately -0.12, suggesting that demand-side price mechanisms in health insurance design work similarly for low-income and higher-income individuals. We also find that cost sharing subsidies substantially lower out-of-pocket medical care spending, showing that the CSR program is a key mechanism for making health care affordable to low-income individuals.
Subjects: 
demand elasticities
health insurance
moral hazard
ACA
marketplaces
AV-variants
low-value care
lifestyle drugs
value-based CSRs
Utah
JEL: 
H24
H41
H43
H51
I11
I18
J32
J33
J68
Document Type: 
Working Paper

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