The idea that the Affordable Care Act is a job killer is one of those regularly debunked talking points that won’t disappear. So, here’s yet more evidence that the ACA has had very little impact on the labor market.
In a new study from the National Bureau of Economic Research, a team of Stanford University economists found that even though different regions experienced varying labor market effects likely related to the ACA, the overall impact to jobs numbers was insignificant. In particular, researchers wrote: “Our findings indicate that the average labor supply effects of the ACA were close to zero but that this average masks important heterogeneity in its effects.”
The study addresses estimates from the Congressional Budget Office released before ACA implementation that said the health reform law — which made it possible for most Americans to access affordable health care regardless of employment status — could reduce the size of the labor force by up to 2 percent by 2024. However, since key provisions of the ACA went into effect in 2014, the Stanford researchers found that differing labor market effects across the nation essentially cancelled each other out.
“The idea that the ACA is a job killer — we don’t see that actually happening,” study co-author Gopi Shah Goda, deputy director and senior fellow at the Stanford Institute for Economic Policy Research, told me.
To conduct the study, Goda and colleagues investigated whether regions with bigger ACA-related coverage gains also experienced larger changes in their labor markets. The study did come with a big challenge however — because the ACA covered the entire nation and became effective for everyone at the same time, researchers didn’t have an obvious or natural control group.
To make up for that, researchers teased out regions where labor market changes would likely be unrelated to the ACA — those would end up being the control group — so they could more clearly isolate which impacts were actually associated with the health reform law. Here’s how Goda explained it: Say there’s one region home to a low rate of uninsured people who would be eligible for Medicaid expansion and another region with a high rate of uninsured people eligible for Medicaid. If labor market changes occurred within the first region, researchers could reasonably assume those changes would have happened anyway; however, if changes were only documented in the second region, researchers could reasonably associate the changes with the ACA.
“We’re trying to understand the causal impact of the ACA on the labor market,” Goda said. “So we had to find a way to create a control group so we could understand the effects of the ACA relative to what would have happened without the ACA.”
Goda, along with colleagues Mark Duggan and Emilie Jackson, found that in areas with a high share of people who were uninsured and eligible for private insurance subsidies, labor force participation fell significantly. On the other hand, in areas with a high share of uninsured people but with incomes too low to qualify for marketplace subsidies, labor force participation went up significantly. They write: “These changes suggest that middle-income individuals reduced their labor supply due to the additional tax on earnings while lower income individuals worked more in order to qualify for private insurance. In the aggregate, these countervailing effects approximately balance.”
The study also found “little evidence” that the ACA impacted part-time employment, self-employment and hours worked. Also of note, states that expanded their Medicaid programs typically experienced larger average decreases in unemployment. Overall, however, the aggregate labor market effects both in states that did expand Medicaid and those that didn’t were relatively small.
While the study doesn’t tease out the precise reasons for the labor market changes, Goda had some hunches. For example, she said it’s possible that people eligible for Medicaid decided to make job changes that would allow them to qualify for marketplace subsidies and therefore gain private insurance coverage. Or it could be that Medicaid enrollment led to some people becoming healthier and increasing their labor force participation.
Goda, who said she and colleagues hope to continue this line of research as more ACA data comes out, said it’s fair to use the study’s findings to refute claims that the ACA is a job killer.
“We hope these findings are taken into consideration whenever discussions of the ACA or changes to the ACA are being made,” she told me. “I think because the impacts of the ACA over the last few years have been different than what was predicted, it makes sense to consider these labor market non-effects whenever considering changes to the law.”
In more good ACA news released this month, the Centers for Disease Control and Prevention’s National Center for Health Statistics reported that in the first three months of 2017, 28.1 million people of all ages were uninsured — that’s half a million fewer uninsured people than in 2016 and 20.5 million fewer uninsured people than in 2010. Overall, from 1997 through 2013, the percentage of adults ages 18 to 64 who were uninsured generally increased. However, more recently, rates of uninsured adults have gone down each year, from more than 20 percent in 2013 to about 12 percent in the first quarter of 2017.
For a copy of the new ACA labor market study, visit the National Bureau of Economic Research.
Kim Krisberg is a freelance public health writer living in Austin, Texas, and has been writing about public health for 15 years. Follow me on Twitter — @kkrisberg.