Nearly 1 Million Americans Could Leave Their Jobs Because of Health Care Reform

Up to 900,000 Americans could decide to stop working because of the Affordable Care Act, according to research from the University of Chicago Booth School of Business. The study is based on the abrupt end of Tennessee’s Medicaid expansion in 2005. That year, Tennessee dropped 170,000 of its citizens from Medicaid, which was the largest Medicaid disenrollment in the history of the program.

In 1994, Tennessee’s expanded its Medicaid public health insurance program to provide for uninsured and uninsurable adults regardless of age, income or family status, becoming one of the most generous in the country. But the program was ended  nine years later, largely due to budgetary constraints. Approximately 170,000 residents lost coverage.

Those who lost coverage were disproportionately single, childless adults with incomes slightly higher than the federal poverty line. That population is very similar to uninsured Americans who are likely to gain coverage under the Affordable Care Act.

Close to half of those who lost TennCare coverage in 2005 found insurance through an employer. As soon as TennCare coverage ended, there was a spike in Google searches for “job openings” in Tennessee.

“This shows that there are many people out there who look for work simply because they need health insurance. For them, the perk matters more than the paycheck,” says Tal Gross, co-author of the paper and assistant professor of Health Policy and Management at the Mailman School.

“The fact that people are working solely to get health insurance signals a failure of the private health insurance market,” explains Matthew J. Notowidigdo, Neubauer Family Assistant Professor of Economics at the University of Chicago Booth School of Business and a study co-author. “That’s one of the reasons why the Affordable Care Act was created.”

With Medicaid rapidly expanding under the Affordable Care Act, the researchers foresee that such a progression could happen in reverse: The option of public health insurance may lead some Americans to retire or to leave their jobs. This doesn’t make the Affordable Care Act a “job killer,” as some have suggested; it just provides an alternative way to procure health insurance that doesn’t require people to work for the “perk.”

“When the Affordable Care Act is enacted, hundreds of thousands of people may choose to leave the labor force or retire earlier…because they now have access to health insurance outside of their jobs,” explains Craig Garthwaite, assistant professor at Northwestern University’s Kellogg School of Management and a study co-author. “It’s giving people important options that otherwise wouldn’t exist without the ACA. Historically, health insurance in the United States has been tightly linked to employment, and the ACA weakens that link.” For more information, contact Ethan Grove at 773-834-5161 orethan.grove@ChicagoBooth.edu.

Last Updated 10/21/2020

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