Replication data for: Subsidizing Health Insurance for Low-Income Adults: Evidence from Massachusetts

Summary:  View help for Summary How much are low-income individuals willing to pay for health insurance, and what are the implications for insurance markets? Using administrative data from Massachusetts' subsidized insurance exchange, we exploit discontinuities in the subsidy schedule to estimate willingness to pay and costs of insurance among low-income adults. As subsidies decline, insurance take-up falls rapidly, dropping about 25 percent for each $40 increase in monthly enrollee premiums. Marginal enrollees tend to be lower-cost, indicating adverse selection into insurance. But across the entire distribution we can observe (approximately the bottom 70 percent of the willingness to pay distribution) enrollees' willingness to pay is always less than half of their own expected costs that they impose on the insurer. As a result, we estimate that take-up will be highly incomplete even with generous subsidies. If enrollee premiums were 25 percent of insurers' average costs, at most half of potential enrollees would buy insurance; even premiums subsidized to 10 percent of average costs would still leave at least 20 percent uninsured. We briefly consider potential explanations for these findings and their normative implications.

JEL Classification:  View help for JEL Classification
      G22 Insurance; Insurance Companies; Actuarial Studies
      H51 National Government Expenditures and Health
      H75 State and Local Government: Health; Education; Welfare; Public Pensions
      I13 Health Insurance, Public and Private
      I18 Health: Government Policy; Regulation; Public Health