Mark Pauly and Scott Harrington, Washington Post, ACA 'Sticker Shock'

Mark Pauly and Scott Harrington, Washington Post, ACA 'Sticker Shock'

A Wharton/LDI team's new study showing the Affordable Care Act didn't boost costs in the individual Health insurance market as much as previous studies claimed, is getting big media play, including a major story in The Washington Post.

The National Bureau of Economic Research (NBER) work by LDI Senior Fellows Mark Pauly and Scott Harrington with PhD student Adam Leive found that consumers who bought their own coverage between 2010 and 2012 saw the average cost of their plan increase between 14% and 28% when they acquired new coverage under the ACA. The Post points out, "that's smaller than the effect
Ari Friedman
The Wharton School's Scott Harrington, Mark Pauly and Adam Leive

measured by other studies, including one from the Manhattan Institute this morning finding that individual premiums increased 49% between 2013 and 2014.

Subsidies not included
In a Post interview, Pauly said the study's numbers didn't include the discounts that low- to middle-income families get as a result of federal subsidies in the insurance exchanges or marketplaces. A new report from the Department of Health and Human Services said the those subsidies reduced the premium costs by 76%.

The study attributes the increases that did occur to higher premiums associated with insurance companies' expectations of a higher risk population being enrolled through the exchanges.

'Considerably lower'
In a conclusion, the authors wrote, "Based on the analysis of data in states where health reform was most likely to increase what purchasers of individual insurance had to pay, our conclusion is that the average "sticker shock" is definitely positive but considerably lower than implied by previous analyses of sticker shock based on premium quotes... the consequences of reform would appear to be more moderate than has often been claimed."

Pauly, PhD, is a Professor of Health Care Management at the University of Pennsylvania Wharton School; Harrington, PhD, is a Wharton School professor of both Health Care Management and Insurance and Risk Management; Lieve is a PhD student in Wharton's Health Care Management Department.