Demand for Health Insurance in the Time of COVID-19: Evidence from the Special Enrollment Period in the Washington State ACA Marketplace

Abstract

I study the demand for health insurance during the COVID-19 pandemic using Special Enrollment Period (SEP) individual-level enrollment data from the Washington State Affordable Care Act Marketplace. I document that most individuals enrolling in plans during the pandemic are those who lost minimum essential coverage, followed by uninsured individuals making use of Washington’s limited-time SEP for uninsured individuals. I estimate a demand model and find that low-income individuals and young individuals are more premium sensitive. I find that 20.4 percent of the individuals in my analysis sample did not pay their initial premium. Individuals losing minimum essential coverage are less likely to pay their initial premium than individuals using the SEP for other qualifying events. Lower income individuals are less likely to pay the initial premium than higher income individuals. My results suggest three reasons for considering more generous premium subsidies during the remainder of the pandemic: (1) individuals losing minimum essential coverage are already using the exchange to replace lost coverage, (2) consumers are premium sensitive, and (3) there are meaningful differences across demographic groups in the probability of paying the first premium, which is necessary for coverage to take effect.