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Adverse Selection into and within the Individual Health Insurance Market in California in 2014

Objective: The Affordable Care Act (ACA) introduced reforms to mitigate adverse selection into and within the individual insurance market. We examined the traits and predicted medical spending of enrollees in California postACA.

Data Sources: Survey of 2,103 enrollees in individual market plans, on and offexchange, in 2014.

Study Design: We compared actual versus potential participants using data from the 2014 California Health Interview Survey on respondents who were individually insured or uninsured. We predicted annual medical spending for each group using age, sex, selfrated health, body mass index, smoking status, and income.

Principal Findings: Average predicted spending was similar for actual ($3,377, 95 percent CI [$3,280$3,474]) and potential participants ($3,257 [$3,060$3,454]); however, some vulnerable subgroups were underrepresented. On versus offexchange enrollees differed in sociodemographic and health traits with modest differences in spending ($3,448 [$3,330$3,565] vs. $3,175 [$3,012$3,338]).

Conclusions: We did not find evidence of selection into the overall insurance pool in 2014; however, differences by exchange status reflect the importance of including offexchange enrollees in analyses and the pool for risk adjustment. California's postACA individual market has been a relative success, highlighting the importance of state policies and outreach efforts to encourage participation in the market.

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