Affordable Care Act may free some from working for health insurance

There are lots of predictions the Affordable Care Act will force employers to lay off employees, reduce hours, and cut seasonal positions. But a report released Monday from the National Bureau of Economic Research finds that up to nearly 1 million workers may voluntarily leave their jobs because of the new health care law.

For empirical evidence of this, the authors point to something dramatic that happened in Tennessee back in 2005. Finances forced state officials to kick 170,000 people off the Medicaid program, which primarily serves low-income residents.

“That’s the largest disenrollment in the history of Medicaid. So this was a pretty big change,” says Tal Gross, a health economist at Columbia and co-author.

What happened next, says Gross, is critical to understanding the potential impact of the Affordable Care Act.

“Roughly half of the people who lost public coverage, regained private coverage through an employer,” he says.

That’s right, people went back to work just so they could have health insurance. Gross believes we’ll likely see the exact opposite under the Affordable Care Act with about 900,000 people leaving their jobs. That’ll happen because for some, the option of subsidized insurance is better than work.

Economist Joe Antos with the American Enterprise Institute says this is a kind of test for the Affordable Care Act.

“If we see over time, that people do in fact migrate from employers, then that’s a pretty good indicator that things worked out well,” he says.

Antos says leaving a job behind is a sign there are affordable insurance options out there. But he says it also means so-called able-bodied adults will get taxpayer subsidized health coverage, when they could be at work.

“The question I think we have is what is the cost to taxpayers, what is the cost to society,” he says.

This report though, gets at something bigger. The Affordable Care Act weakens the bond between your job and your health insurance. MIT economist Amy Finkelstein says it’s hard to make good choices with those two linked.

“It’s like, let’s take a crazy example, suppose we said you know the only way you get food is you have to work 20 hours a week as a Marketplace reporter," Finklestein says. "You’d be better off if you could choose them separately. Some people like to be Marketplace reporters and some people don’t. Most people, though, do want food,” she says.

This report makes it clear the new law gives people choices they didn’t have before.

About the author

Dan Gorenstein is the senior reporter for Marketplace’s Health Desk. You can follow him on Twitter @dmgorenstein.

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