title: Adverse selection and price sensitivity when low-income people have subsidies to purchase health insurance in the private market.
abstract: Policymakers interested in subsidizing low-income people's purchase of private insurance face two major questions: will such subsidies lead to adverse selection, and how large do the subsidies have to be to induce large numbers of eligible people to purchase the insurance? This study examines New Jersey's short-lived experience with a premium subsidy program, Health Access New Jersey (Access Program). The program was for people in families with incomes below 250% of the poverty level who were not eligible for health insurance provided by an employer, or Medicaid or Medicare, and who wished to purchase policies in the state's individual health insurance market, the Individual Health Coverage Program. Surveying a random sample of Access Program policyholders, we compared their demographic and socioeconomic characteristics, as well as their health status, to those of other New Jersey residents who had family incomes below 250% of the poverty level to determine whether there was any evidence of adverse selection among the people who enrolled in the Access Program. The people who enrolled were not in worse health than uninsured people with incomes below 250% of the poverty level, but they were quite price sensitive. Most enrollees had incomes within the low end of the income eligibility distribution, reflecting the structure of rapidly declining subsidies as income increased.
authors.affiliation: Department of Health Policy and Management, Harvard School of Public Health, Boston, MA 02115, USA.
authors.forename: K
authors.initials: K
authors.lastname: Swartz
authors.forename: D W
authors.initials: DW
authors.lastname: Garnick
mesh_terms: D000328:Adult; D016022:Case-Control Studies; D002648:Child; D003365:Costs and Cost Analysis; D004608:Eligibility Determination; D005260:Female; D006291:Health Policy; D006304:Health Status; D006801:Humans; D015273:Insurance Selection Bias; D007348:Insurance, Health / Q000191:economics*; D008297:Male; D008483:Medical Assistance; D017057:Medically Uninsured; D008875:Middle Aged; D009515:New Jersey; D012044:Regression Analysis