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, Revised in August 2015
NBER Program(s):Health Care, Health Economics

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.

download in pdf format
   (669 K)

email paper

Machine-readable bibliographic record - MARC, RIS, BibTeX

Document Object Identifier (DOI): 10.3386/w20196

Published: Asako S. Moriya & Kosali Simon, 2016. "Impact of Premium Subsidies on the Take-up of Health Insurance: Evidence from the 2009 American Recovery and Reinvestment Act (ARRA)," American Journal of Health Economics, vol 2(3), pages 318-343.

Users who downloaded this paper also downloaded* these:
Courtemanche, Marton, Ukert, Yelowitz, and Zapata w22182 Impacts of the Affordable Care Act on Health Insurance Coverage in Medicaid Expansion and Non-Expansion States
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
Kowalski w20597 The Early Impact of the Affordable Care Act State-By-State
Crepon, Devoto, Duflo, and Pariente w20144 Estimating the Impact of Microcredit on Those Who Take It Up: Evidence from a Randomized Experiment in Morocco
Berger and Vavra w20175 Consumption Dynamics During Recessions
NBER Videos

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

Contact Us