Economists suggest the Affordable Care Act (ACA) could cause people to willingly leave their jobs, drawing their predictions from the 2005 Medicaid cuts in Tennessee but in reverse.
Obamacare, or the Affordable Care Act (ACA), is a controversial United States federal statute which was signed into law by President Barack Obama on March 23, 2010. Together with the Health Care and Education Reconciliation Act, the Affordable Care Act represents the most significant government expansion and regulatory overhaul of the US healthcare system since the passage of Medicare and Medicaid in 1965.
The Affordable Care Act aims to increase the affordability and rate of health insurance coverage for Americans through mandates, fines, subsidies, and tax credits. The Affordable Care Act requires insurance companies to cover all applicants within new minimum standards, and offer the same rates regardless of pre-existing conditions.
Numerous provisions under the blanket of the Affordable Care Act will take several years to take effect. Until then, many have heavily debated the impact of such measures on the US economy and growth.
Economists from the Columbia University Mailman School of Public Health, Northwestern University Kellogg School of Management, and the University of Chicago, Booth School of Business have released their analysis as a working paper – distributed by the National Bureau of Economic Research.
In it, they state the implementation of the Affordable Care Act could have several consequences, including an estimated 500,000 to 900,000 people willingly opting to leave their jobs.
The economists used an analysis of a parallel situation, but in reverse: the abrupt end of Tennessee’s Medicaid expansion in 2005. That year, Tennessee dropped nearly 190,000 of its citizens from Medicaid/TennCare, largely due to budgetary constraints, making it was the largest Medicaid disenrollment in the history of the program.
Those who lost coverage were disproportionately single, childless adults with incomes just slightly higher than the federal poverty line. That population is very similar to uninsured Americans who are likely to gain coverage under the Affordable Care Act, according to researchers.
Shortly following the TennCare drop, half of those who lost their coverage in 2005 sought out insurance coverage through an employer. This led to a phenomenon referred to as “employment lock” or the idea that people must keep working in order to keep their health insurance.
Dr. Matthew J. Notowidigdo – assistant professor at the University of Chicago, Booth School of Business and a study co-author – explains in Medical Express:
“The fact that people are working solely to get health insurance signals a failure of the private health insurance market. That’s one of the reasons why the Affordable Care Act was created.”
However, with Medicaid rapidly expanding under the Affordable Care Act, the researchers foresee such a progression could happen in reverse, stating the option of public health insurance may lead some Americans to retire or to leave their jobs in large numbers.
According to the economists, this doesn’t make the Affordable Care Act a job killer as suggested, but provides an alternative way to procure health insurance that doesn’t require people to work for the benefit.
Craig Garthwaite – assistant professor at Northwestern University’s Kellogg School of Management and a study co-author – says, according to Science Blog:
“When the Affordable Care Act is enacted, it’s possible that hundreds of thousands of people may choose to leave the labor force or retire earlier than they otherwise would have because they now have access to health insurance outside of their jobs. It’s giving people important options that otherwise wouldn’t exist without the ACA.”
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