Wedges, Labor Market Behavior, and Health Insurance Coverage under the Affordable Care Act
The Affordable Care Act's taxes, subsidies, and regulations significantly alter terms of trade in both goods and factor markets. We use a multi-sector (intra-national) trade model to predict and quantify consequences of the Affordable Care Act for the incidence of health insurance coverage and patterns of labor usage. If and when the new exchange plans are competitive with employer-sponsored insurance (ESI), our model suggests that more than 20 million people will leave ESI as a consequence of the law. Behavioral changes that are captured in the model could add about 3 million participants to the new exchange plans: beyond those that would participate solely as the result of employer decisions to stop offering coverage and beyond those who would have been uninsured. Industries and regions will grow, decline, and change coverage on the basis of their relative demand for skilled labor.
We appreciate comments from workshop participants at the University of Chicago, the Atlanta Fed, and the financial support of the George J. Stigler Center for the Study of the Economy and the State. The views expressed herein are those of the authors and do not necessarily reflect the views of the National Bureau of Economic Research.
Trevor S. Gallen & Casey B. Mulligan, 2018. "Wedges, Labor Market Behavior, and Health Insurance Coverage under the Affordable Care Act," National Tax Journal, vol 71(1), pages 75-120. citation courtesy of