Working Paper: NBER ID: w26350
Authors: Hanming Fang; Andrew J. Shephard
Abstract: Health insurance in the United States for the working age population has traditionally been provided in the form of employer-sponsored health insurance (ESHI). If employers offered ESHI to their employees, they also typically extended coverage to their spouse and dependents. Provisions in the Affordable Care Act (ACA) significantly alter the incentive for firms to offer insurance to the spouses of employees. We evaluate the long-run impact of ACA on firms’ insurance offerings and on household outcomes by developing and estimating an equilibrium job search model in which multiple household members are searching for jobs. The distribution of job offers is determined endogenously, with compensation packages consisting of a wage and menu of insurance offerings (premiums and coverage) that workers select from. Using our estimated model we find that households’ valuation of employer-sponsored spousal health insurance is significantly reduced under ACA, and with an “employee-only” health insurance contract emerging among low productivity firms. We relate these outcomes to the specific provisions in the ACA.
Keywords: health insurance; Affordable Care Act; spousal insurance; labor market dynamics; job search model
JEL Codes: G22; I11; I13; J32
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| ACA (G52) | reduction in valuation of employer-sponsored spousal health insurance (J32) |
| ACA (G52) | decline in firms' insurance offerings (G52) |
| decline in firms' insurance offerings (G52) | reduction in valuation of employer-sponsored spousal health insurance (J32) |
| availability of alternative health insurance options (G52) | reduction in necessity for spousal insurance (G52) |
| reduction in necessity for spousal insurance (G52) | affects job mobility (J62) |
| reduction in necessity for spousal insurance (G52) | affects dynamics of household labor supply (D13) |