The Effects of Political Versus Actuarial Uncertainty on Insurance Market Stability

Abstract

Market stabilization is a critical regulatory challenge for the private insurance component of the Affordable Care Act (ACA). Initially ACA market instability was due largely to the actuarial uncertainty associated with new market conditions for which good actuarial data were lacking. Then, in 2017, just as actuarial uncertainty was abating, political uncertainty came into play, reactivating and compounding actuarial uncertainty. Agreement is widespread that some stabilization measures are needed to improve the functioning of the ACA's market reforms. Based on documentary research at a national level and in-depth case studies in ten states, this study examines the role actuarial and political uncertainty have played in creating unstable market conditions and explores what measures state and federal lawmakers could take to improve market conditions.

The Affordable Care Act’s Coverage Impacts in the Trump Era

“…In the ninth check, we drop our control for initial exchange glitches and instead include a time varying control for state based exchange status. 65 , 66 In the 10th check, we add controls for state Republican presidential vote share in the 2012 and 2016 elections as proxies for state partisanship, 67 - 69 as well as a time varying indicator for whether a state has a state based reinsurance program. 70 In the 11th check, we add controls for Marketplace premium levels, premium spreads, and the number of insurers.…”