Mandate-Based Health Reform and the Labor Market: Evidence from the Massachusetts Reform
Early Career Research Award
In the United States, changes in health policy are inextricably linked to labor market decisions because most health insurance is provided by an employer. The relationship between health insurance and the labor market is critical for recent Massachusetts and national reforms that rely on existing coverage infrastructure to expand health insurance. In this project, we propose to develop a model of the labor market impact of key provisions of recently-passed national health insurance reform: a mandate that individuals have coverage, a mandate that employers offer coverage, and expansions in publicly- subsidized coverage. We will then rely on the model to compare the labor market distortions of alternate policies to expand health insurance coverage. We then propose to study the impact of health reform on the labor market empirically by relying on the reform implemented in Massachusetts – similar to the national reform in all of the key elements in our model. Using longitudinal data, we will estimate the impact on individuals who gained employer-sponsored health insurance (ESHI) because of the reform on wage levels and employment. Our model will allow us to translate these wage declines into sufficient statistics for welfare analysis, providing an empirical estimate of the welfare impact of “mandate-based” policies for health insurance expansion, including the Patient Protection and Affordable Care Act (PPACA).