Journal of Health Economics 53 (2017) 72–86
Contents lists available at ScienceDirect
Journal of Health Economics
journal homepage: www.elsevier.com/locate/econbase
Premium subsidies, the mandate, and Medicaid expansion: Coverage
effects of the Affordable Care Act
Molly Frean a , Jonathan Gruber b , Benjamin D. Sommers c,?
a
Harvard T.H. Chan School of Public Health, 677 Huntington Ave, Kresge 4th Floor, Boston, MA 02115, United States
Massachusetts Institute of Technology and National Bureau of Economic Research, Department of Economics, E52-434, 77 Massachusetts Avenue,
Cambridge, MA 02139, United States
c
Harvard T.H. Chan School of Public Health, 677 Huntington Ave, Kresge Room 406, Boston, MA 02115, United States
b
a r t i c l e
i n f o
Article history:
Received 15 September 2016
Received in revised form 17 February 2017
Accepted 24 February 2017
Available online 6 March 2017
JEL classi?cation:
H51
I11
I13
Keywords:
Health insurance
Medicaid
Tax credits
Individual mandate
a b s t r a c t
Using premium subsidies for private coverage, an individual mandate, and Medicaid expansion, the
Affordable Care Act (ACA) has increased insurance coverage. We provide the ?rst comprehensive
assessment of these provisions’ effects, using the 2012–2015 American Community Survey and a tripledifference estimation strategy that exploits variation by income, geography, and time. Overall, our model
explains 60% of the coverage gains in 2014–2015. We ?nd that coverage was moderately responsive to
price subsidies, with larger gains in state-based insurance exchanges than the federal exchange. The
individual mandate’s exemptions and penalties had little impact on coverage rates. The law increased
Medicaid among individuals gaining eligibility under the ACA and among previously-eligible populations
(“woodwork effect”) even in non-expansion states, with no resulting reductions in private insurance.
Overall, exchange premium subsidies produced 40% of the coverage gains explained by our ACA policy
measures, and Medicaid the other 60%, of which 1/2 occurred among previously-eligible individuals.
© 2017 Elsevier B.V. All rights reserved.
One of the most signi?cant policy issues facing the United States
over the past forty years has been the high number of those without health insurance. The percentage of uninsured Americans rose
steadily from the 1980s through 2010, through both recessions
and economic growth (DeNavas-Walt et al., 2013). A major policy focus during this era was intervening in insurance markets to
expand coverage and offset this trend. This mostly happened using
public insurance via Medicaid and the Children’s Health Insurance Program, with little private sector intervention (Gruber and
Levitt, 2000). This pattern of incremental public coverage expansion changed dramatically with the passage of the Affordable Care
Act (ACA) in 2010.
The ACA enacted enormous expansions of both public and private insurance. The former was to take place through a nationwide
expansion of Medicaid to all those with incomes below 138% of the
Federal Poverty Level (FPL); however, the Supreme Court ruled in
2012 that states could refuse this expansion. The private insurance
expansion takes place through sizeable income-based tax credits
? Corresponding author.