There are two very short passages in a pair of ACA papers that are tertiary findings of those particular papers that have greatly influenced how I think about the ACA since the first time that I saw them. These two passages would have seemed bizarre to me in September 2013 when I was first started to write at Balloon-Juice and was working way too many hours putting together the UPMC Health Plan provider networks. But these two passages have significantly shaped my thinking.
First, Coleman Drake and Jean Abraham** looked at the affordability of plans after silverloading in the July 2019 Health Services Research. They conducted a sensitivity analysis that had a null result that is utterly fascinating:
This was a sensitivity analysis to eliminate possible alternative explanations from their primary finding. They wanted to know if insurers were acting strategically. I think this is a reasonable question. Were insurers recognizing that they were in monopoly counties and acting differently than if they were in deeply competitive markets? A profit maximizing insurer should act very differently. In a competitive market, premium spreads are likely to be low while in a monopoly market, premium spreads are whatever the insurer wants them to be. Yet Drake& Abraham found little evidence of deliberate strategic behavior.
That is fascinating!
Paul Shafer, Sarah Gollust, Seciah Aquino, Laura Baum, Ericka Franklin-Fowler ## and I recently published a large study on the effects of advertising on ACA enrollment in the Russell Sage Foundation Journal of Social Sciences (open access). We found some small effects of advertising on enrollment:
These models demonstrate that both sponsor and the specific product marketed are consequential for whether advertising volumes are associated with Marketplace enrollment rate (plan selections per hundred thousand population younger than sixty-five). Specifically, model 1 finds no relationship between health insurance ad volume overall and the Marketplace enrollment rate. Model 2 disaggregates by sponsor type and we see large positive estimates of the marginal effect of federal and both types of state ads (own and other state) on the Marketplace enrollment rate; however, only the volume of ads from other states reaches statistical significance. Finally, model 3 disaggregates the private ads further by product, showing that private non-Medicare, non-Medicaid, and private Medicaid airings are positively associated with enrollment, offering evidence of a spillover effect across products….
However the finding that has changed my thinking is also a secondary finding:
Higher premiums are counterintuitively good for enrollment. This is a finding about the unusual gearing of price linked subsidies. A 2% gap at $500 a month is significantly smaller and less valuable than a 2% gap at $1,000 per month for a benchmark premium. Premium spreads for the cheapest silver and cheapest subsidized plan are often far greater than 2%. It is the intuition that prompted my interest in zero premium plans and really gets to the functionality of the CSR silverloading mechanics that have fascinated me since Spring 2017. This little factoid gives a number to an inkling.
Neither of these facts are overwhelming, but they have shaped how I look at the ACA pricing dynamics over the past two years and how I think about the market as it is today and how it could be in 2022 or 2023.
* * The three of us write together frequently and, in the past 20 months, prolifically.
## Paul and I write together a lot. We’re in the midst of cooking several papers for late 2020 or early 2021 submissions. I’m co-authoring with Paul, Sarah, Laura and Ericka another paper that is currently under review.