Impact of Premium Subsidies on the Take-up of Health Insurance: Evidence from the 2009 American Recovery and Reinvestment Act (ARRA)

Asako S. Moriya, Kosali Simon

NBER Working Paper No. 20196
Issued in June 2014
NBER Program(s):   HC   HE

We study the coverage impacts of a 65-percent health insurance premium subsidy which targeted employer-insured workers who lost their jobs between September 2008 and May 2010. Our research represents the first econometric analysis of the American Recovery and Reinvestment Act (ARRA) COBRA subsidy and contributes to a better understanding of consumer responses to government subsidized private health insurance and discussions surrounding Affordable Care Act (ACA) policies. Using data from the Survey of Income and Program Participation (SIPP) and a difference-in-differences estimation strategy, we find that the subsidy is associated with a substantial increase in own-name employer coverage among the targeted group. We estimate a -0.38 to -0.27 price elasticity of demand for health insurance, depending on the specification. This suggests that consumers are somewhat more price sensitive than previously thought, although there are caveats to generalizing from past settings to individuals affected by ACA subsidies. We also find that part of the increase in subsidized coverage was offset by a decrease in unsubsidized non-group insurance.

The NBER Bulletin on Aging and Health provides summaries of publications like this.  You can sign up to receive the NBER Bulletin on Aging and Health by email.

You may purchase this paper on-line in .pdf format from ($5) for electronic delivery.

Information about Free Papers

You should expect a free download if you are a subscriber, a corporate associate of the NBER, a journalist, an employee of the U.S. federal government with a ".GOV" domain name, or a resident of nearly any developing country or transition economy.

If you usually get free papers at work/university but do not at home, you can either connect to your work VPN or proxy (if any) or elect to have a link to the paper emailed to your work email address below. The email address must be connected to a subscribing college, university, or other subscribing institution. Gmail and other free email addresses will not have access.


This paper was revised on August 5, 2015

Machine-readable bibliographic record - MARC, RIS, BibTeX

Document Object Identifier (DOI): 10.3386/w20196

Users who downloaded this paper also downloaded these:
Crepon, Devoto, Duflo, and Pariente w20144 Estimating the Impact of Microcredit on Those Who Take It Up: Evidence from a Randomized Experiment in Morocco
Akosa Antwi, Moriya, and Simon w20202 Access to Health Insurance and the Use of Inpatient Medical Care: Evidence from the Affordable Care Act Young Adult Mandate
Dranove, Garthwaite, and Hermosilla w20212 Pharmaceutical Profits and the Social Value of Innovation
Davis and Hausman w20186 The Value of Transmission in Electricity Markets: Evidence from a Nuclear Power Plant Closure
Mian and Sufi w20152 House Price Gains and U.S. Household Spending from 2002 to 2006
NBER Videos

National Bureau of Economic Research, 1050 Massachusetts Ave., Cambridge, MA 02138; 617-868-3900; email:

Contact Us