Effects of Marketplace Premiums on Uninsurance

After the 2015 open enrollment period, 11.7 million Americans had selected plans in their states’ Marketplaces, the health insurance exchanges created by the Affordable Care Act.  By the first half of 2015, the uninsured were only 10.5% of the nonelderly population.  Yet, despite the Marketplaces, Medicaid eligibility expansions in many states, and financial incentives to obtain insurance, 28.5 million people remain uninsured.  This paper measures the extent to which uninsurance is explained by the premiums faced by families eligible for the Marketplace.   

            The study focuses on the lowest-cost silver and bronze plans, and effects are identified with variation in premiums by county and family members’ ages, tobacco use, and incomes.  For families without tobacco users and incomes not exceeding 400% of poverty, premium tax credits cap out-of-pocket premiums for the second lowest-cost silver plan, but, conditional on income, there is geographic variation in saving from selecting the lowest cost silver or bronze plan.  In states that allow tobacco use surcharges, premiums for tobacco users are typically about 15 percent above the premiums of adults who do not use tobacco, but premium tax credits do not apply to the surcharges.  

            The sample, drawn from the 2014 nationally representative Medical Expenditure Panel Survey (MEPS), consists of the nonelderly who were:  not offered employer sponsored insurance through their own, spouse’s, or parents’ jobs; not enrolled in Medicare; and with incomes above 138% of the federal poverty guidelines.  Using confidential geographic information, premiums are merged onto the MEPS by county and age.  Out-of-pocket premiums are premiums less tax credits, which are calculated based on each family’s modified adjusted gross income (MAGI) and the second lowest-cost silver plan in the county (excluding the tobacco use surcharge). MAGI is simulated as of the first MEPS interview of the calendar year using detailed information about sources of income and family structure, and the final regulations from the Internal Revenue Service (IRS).   The MEPS collects current smoking status for each adult, as well as health status, demographics, and attitudes.  The unit of analysis is the family, because (1) the premium tax credit caps premiums for the taxpayer and associated tax dependents, and (2) family members share resources.  There are about 2,300 families in the sample.

            The primary outcome is whether all family members eligible for the Marketplace were uninsured.  Coverage of only some eligible family members is rare.  Insurance status is regressed on premiums, health status, socioeconomic variables, income, and attitudes toward care and insurance.  Health status measures are summarized in terms of the number of chronic conditions in the family, and the worst Short Form 12 summary score among adults.  The elasticities of uninsurance with respect to the premiums for bronze and silver are compared.  In some counties bronze plans are free for some families receiving tax credits, so the reduction in uninsurance if all bronze plans were free is simulated.