Regulated Age-Based Pricing in Subsidized Health Insurance : Evidence from the Affordable Care Act

We study age-rating restrictions in the health insurance marketplaces introduced by the Affordable Care Act. Because most buyers are subsidized, although age-rating restrictions affect pre-subsidy premiums, participation is primarily driven by subsidy generosity rather than pricing decisions. Combining pre and post-reform data on prices and enrollment we find that age-rating restrictions altered pre-subsidy premiums: $230/year for under-50 buyers and -$900/year for over-50 buyers. Accounting for the ACA subsidy design, this regulation decreased federal spending by more than 10%, and reduced participation by 2% (-4% among under-50, 2% among over-50). These effects differ across regions, varying with the age-composition of the uninsured