Full Citation
Title: Nonparametric Estimates of Demand in the California Health Insurance Exchange
Citation Type: Miscellaneous
Publication Year: 2018
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Abstract: We estimate the demand for health insurance in the California Affordable Care Act marketplace (Covered California) without using parametric assumptions on the distribution of the unobserved components of utility. To do this, we develop a computational method for constructing sharp identified sets in a nonparametric discrete choice model. The method allows for endogeneity in prices (premiums) and for the use of instrumental variables to address this endogeneity. We use the method to estimate bounds on the effect of changes in premium subsidies on coverage choices, consumer surplus, and government spending. We find that a $10 decrease in monthly premium subsidies would cause between a 2.3% and 11.4% decline in the proportion of lowincome adults with coverage. The corresponding reduction in total annual consumer surplus would be between $43 and $66 million, while the savings in yearly subsidy outlays would be between $293 and $944 million. These nonparametric estimates reflect substantially greater price sensitivity than in comparable logit or probit models.
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Authors: Tebaldi, Pietro; Torgovitsky, Alexander; Yang, Hanbin
Publisher: University of Chicago
Data Collections: IPUMS USA
Topics: Other, Population Health and Health Systems
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