Panel Paper: Early Evidence on Employment Responses to the Affordable Care Act: Employer Coverage Offers

Thursday, November 3, 2016 : 1:55 PM
Columbia 9 (Washington Hilton)

*Names in bold indicate Presenter

Jean Abraham1, Anne Royalty2 and Coleman Drake1, (1)University of Minnesota, (2)Indiana University Purdue University Indianapolis

Research Objective: To investigate how offers of employer-based insurance changed in the first year after the Affordable Care Act (ACA) was implemented, and the extent to which any changes can be explained by variation in establishment type, workforce characteristics, and state-level insurance policy attributes.

Study Design: This study uses the 2014 Medical Expenditure Panel Survey-Insurance Component (MEPS-IC) List Sample. The MEPS-IC is a nationally-representative, establishment-level survey of U.S. employers that collects detailed information on employer offers of insurance and establishment characteristics including industry type and tenure. As an employer-level dataset, it also has the advantage that, unlike most individual-level survey data, it collects information about characteristics of the workforce at the establishment, such as the size of the workforce and the percentage of the workforce that is low-wage (i.e., earns below $11.50 per hour). These workforce characteristics are likely to be important predictors of employer decisions about offering health insurance.  We augment the MEPS-IC with time-varying, geographic-specific information about local labor market conditions (e.g., county-level unemployment rate) and state-level insurance policy attributes (e.g., Medicaid eligibility for childless adults, change in community rating regulations, and Exchange type).

Our econometric modeling approach takes advantage of a new question added to the MEPS-IC instrument in 2014, which asks each establishment whether it was offering insurance or not in 2014 and 2013. From this, we are able to model whether an establishment that was offering insurance in 2013 dropped it in 2014, and whether an establishing that was not offering insurance in 2013 added it in 2014. We examine whether both decisions can be explained by variation in the establishment, workforce and policy-related variables described above. We test a variety of specifications with linear probability and binary logit specifications.

Findings: Because we are using the MEPS-IC, the analyses are being conducted within a Census Research Data Center and require a rigorous disclosure process. The output for our analysis is currently under review. We anticipate disclosure no later than the end of April.  We have full confidence that we will have a completed in paper well in advance of the conference.

Discussion: Labor market effects are one of the most controversial issues surrounding ACA implementation.  And, putting politics aside, effects on labor markets raise more fundamental questions about the linking of health insurance to employment.  As the insurance market changes with the ACA and options for insurance purchase expand, policymakers need to understand how the remaining links of insurance to employment are affecting offers of employer-based insurance. The findings of this analysis will to shed light on this relationship and can inform the policy discussion and decision-making surrounding it.