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. Although age-rating restrictions affect pre-subsidy premiums, participation is primarily driven by subsidy generosity rather than pricing decisions because most buyers are subsidized. By combining pre- and post-reform data on prices and enrollment, we find that age-rating restrictions alter pre-subsidy premiums, with an increase of $230 per year for buyers under 50 years old and a decrease of $900 per year for buyers over 50. Accounting for the Affordable Care Act subsidy design, this regulation decreases federal spending by more than 10% and reduces overall participation by 2%. These effects vary based on the age composition of the uninsured across regions.