Partisanship, policy and adverse selection

Samual Trachtman’s fascinating paper** on the feedback loop between political polarization and ACA premiums just got released by the Journal of Health Politics, Policy and Law (JHPPL).

The headline finding is fascinating on multiple levels:

Insurers have increased marketplace premiums at higher rates in areas with more Republican voters. In the preferred model specification, a 10-percentage-point difference in Republican vote share is associated with a 3.2-percentage-point increase in average premium growth for a standard plan.

The mechanism is fairly simple. At any given level of health, Republicans are less likely to sign up for insurance:

Recent scholarship indicates that the uptake decisions that individuals make with respect to the ACA are driven in part by their political partisanship. Using individual-level survey data from Kaiser Health Tracking polls, Lerman, Sadin, and Trachtman (2017) estimate that, ceteris paribus, Republicans are 6 percentage points more likely to forgo coverage than Democrats, 12 percentage points less likely to use the ACA marketplaces, and 7 percentage points more likely than Democrats to purchase plans off marketplace

In heavily Republican leaning areas, this means the average enrollee has higher expected costs than the average enrollee in a heavily Democratic leaning area. Higher expected costs, all else being equal, leads to higher premiums. The partisan take-up effect is fascinating. Paul Shafer and I ## had found conflicting partisanship signals when we looked at changes in enrollment in the 2017 open enrollment period before and after Trump’s inauguration.

This has interesting dynamics on the subsidized versus unsubsidized experience split (this is the manuscript I need to revise and resubmit by the end of the week). All else being equal, a more morbid/expensive risk pool is good for affordability for subsidized individuals who can buy a plan that is priced below the benchmark. All else being equal, a more morbid/expensive risk pool is horrendous for non-subsidized individuals as they pay the entire premium. The partisan feedback loop creates a differential experience wedge conditional on subsidy eligiblity.

** Samuel Trachtman; Polarization, Participation, and Premiums: How Political Behavior Helps Explain Where the ACA Works, and Where It Doesn’t. J Health Polit Policy Law 7785787. doi: https://doi.org/10.1215/03616878-7785787

## David Anderson, Paul Shafer; The Trump Effect: Postinauguration Changes in Marketplace Enrollment. J Health Polit Policy Law 7611623. doi: https://doi.org/10.1215/03616878-7611623






8 replies
  1. 1
    Victor Matheson says:

    Does either paper control for expected health status of individual purchasers? If Democrats are more likely to be sick or disabled (and concern for the less advantaged might be a reason to become Dem rather than Rep), then they have a natural reason to take up insurance other than partisan lean.

    Race could also be a factor as blacks are generally less healthy than whites, but I suppose race controls would be included, right?

    See, I behave both like a soccer referee and an academic referee.

  2. 2
    satby says:

    @Victor Matheson: I would be skeptical that Democrats would generally be less healthy, centered in cities with greater access to health care than out in rural red areas with less doctors, hospital beds, and health outreach in general.

  3. 3
    Gin & Tonic says:

    @satby: I’d also be interested in seeing statistics on party affiliation correlation with “healthy lifestyles.” My gut tells me that the sprout-and-grain-eating, moderate-to-non-drinking, 5k-running sort of people are more likely to be liberals. But maybe that’s just bias on my part.

  4. 4
    waratah says:

    @Gin & Tonic: I live in really red part of Texas and conservatives here are into healthy lifestyles including farmers ranchers. Texans call the mountains in New Mexico and Colorado their summer and winter playground.

  5. 5
    Lee says:

    There was an interesting article a week or so ago ‘Dying of Whiteness’. On mobile so don’t have the link.

    It was an infuriating read.

  6. 6
    Lee says:

    @waratah:

    I also live what was once a really red area of texas (suburb of Dallas that is probably purple now).

    I think it probably correlates more with socioeconomic status.

  7. 7
    Eolirin says:

    @Lee: And socioeconomic status tends to correlate with education levels, which correlates with liberalness. At least to a point. The ultrawealthy are more heavily republican, but also so few in number that they’re unlikely to skew these sorts of stats all that much.

    Poverty and race are also factors, and I’d expect they’d be controlled for, the abstract certainly says they are.

  8. 8
    Mart says:

    @Lee: Friends of ours in TX recently ended up unemployed like me. I began to explain how the ACA has benefited my wife and I. They cut me off saying they would never sign up for that bullshit Obama program. So there is that bias as well.

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