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Will the Affordable Care Act kill jobs?

Many public policy decisions have impacts distant from their original intent. Public expansion of health insurance has often been associated with alterations in the labor force. So does the Affordable Care Act kill jobs or save them?

For many in the labor force, health insurance is regarded as a coveted benefit provided to employees by their employers.   Most employees seek employment that provides health insurance as part of their benefits package; and, given their level of income and health status, many will continue working in undesired positions and/or for undesired amount of hours per week solely to maintain their health insurance benefits.  According to the 2010 U.S. Bureau of Labor Statistics, 86 percent of full-time workers (equal to or greater than 35 hours per week) have access to health insurance benefits as opposed to 24 percent of part-time workers.

Low-income individuals who may desire to work part-time or leave the work force altogether (e.g. single mothers, adults close to retirement, and adults in poor health) may continue working full-time solely to maintain access to employer-sponsored health insurance benefits.  Since the passage of the Affordable Care Act (ACA), speculation has been made that the rate of low-income, childless nonelderly adults working full-time in the U.S. labor force will decrease while rates of these individuals working part-time or leaving the labor force will significantly increase with the expansion of access to government-provided health insurance (Medicaid).  This study explored the possible changes to the nation’s labor force participation for low-income childless nonelderly adults whose access to health insurance will no longer depend on their employment status after the full implementation of the ACA. Researchers made use of labor force participation data between 2001-2008 when ten states (AZ, IN, IA, ME, MD, MI, NM, NY, PA and UT) and the District of Columbia initiated state-provided health insurance expansion for individuals ranging between 35 percent and 200 percent of the federal poverty level (FPL).

The data for this analysis were from the Current Population Survey (CPS) for years 1998-2008 sampling childless adults aged 19 to 64 years with family incomes at or below 300 percent FPL (excluding pregnant women, students under the age of 23 years, and individuals reporting coverage through Medicare or TRICARE).  The study reviewed the job characteristics, labor force participation, and statuses of 118,587 childless adults in expansion states and non-expansion states over a 2-year period bracketing coverage expansions.  The researchers used a difference-in-difference model to determine changes in the employment outcomes from the control group (childless adults at or below 300 percent FPL in states without health insurance expansions) to those of the treatment group (childless adults eligible for their state’s public insurance coverage expansion).  The results were expressed as percentage point changes in the probability of labor market participation outcomes associated with the states’ expanded public insurance eligibility.

The average full-time employment rates for eligible childless adults in expansion states declined from 56.1 percent to 51.6 percent after the implementation of their state’s expansion health insurance program; however, part-time employment rates increased from 21.5 percent to 23.5 percent and non-employment rates increased from 22.4 percent to 24.8 percent during the same time period.  Expanded eligibility for public health insurance was also associated with a 2.2 percent reduction in the likelihood of working full-time (p<0.05), a 0.8 percent increase in the likelihood of working part-time (p<0.05), and a 1.4 percent increase in the likelihood of not working at all (p<0.05).  Individuals near retirement (ages 50 to 64) and eligible for health insurance expansions showed a more robust 6.3 percent reduction in the likelihood of working full-time (p<0.01), 2.6 percent increase in the likelihood of working part-time (p<0.01), and 3.7 percent increase in the likelihood of not working at all (p<0.01).

Commentary

Changes in labor force participation will be inevitable after the full implementation of the ACA; however, these changes are not necessarily due to the slothfulness of low-income adults without children.

This study neglects to explore the motivations that would explain why some individuals choose to give up full-time work for either a part-time position or exiting the work force altogether.  Some individuals may need to work part-time due to their own poor health status or to care for an ailing loved one.  Some individuals may want to change jobs or careers but are unable to leave their current jobs for fear of losing health insurance.  With the expansion of Medicaid to all adults earning less than or equal to 133 percent FPL, some individuals will have more freedom with changing jobs or cutting back work hours without jeopardizing health insurance coverage thanks to the Affordable Care Act.  Although this evidence suggests coverage expansions lead to labor participation declines, individuals may see improvement in quality of life; this could lead to improved health status and better use of health care services.

Guy, GP, et al. “Public health insurance eligibility and labor force participation of low-income childless adults.” Med Care Res Rev. Online ahead of print Aug 23, 2012.

by

Tyree Winters, DO 

About Tyree Winters, DO

Lead Analyst – Continuity of Care & The Workforce Dr. Winters has contributed to Policy Prescriptions® since 2010. He received a Bachelor of Arts in Psychology from University of Michigan-Dearborn and completed his medical education at Ohio University College of Osteopathic Medicine. Dr. Winters completed a pediatric residency from Nationwide Children’s Hospital/Ohio State University Medical Center/Doctors West Hospital and is board certified in Pediatrics. He currently is an associate professor of pediatrics at the Ohio State University College of Medicine. Dr. Winters originally hails from Detroit, MI. Contact: Facebook | Twitter | More Posts

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