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