Panel Paper: The Impact of Medicaid Expansion on Employer Provision of Health Insurance

Saturday, November 4, 2017
Toronto (Hyatt Regency Chicago)

*Names in bold indicate Presenter

Anne Royalty1, Jean Abraham2 and Coleman Drake2, (1)Indiana University Purdue University Indianapolis, (2)University of Minnesota

Most health insurance in the U.S. has traditionally been linked to employment. While maintaining the employer-based system, the Affordable Care Act (ACA) dramatically changed options for obtaining non-job-related insurance, expanding the individual market through the Marketplace, premium subsidies, and cost-sharing assistance and public insurance through the Medicaid expansions in states that participated.

Amidst the immense current uncertainty about ACA repeal and possible replacement, perhaps the most certain thing is that the employer-based system will system will remain intact, at least for now. However, if a replacement plan is to cover some or all of those who obtained insurance through the ACA, it will need to include options for non-employer based coverage. Because the ACA expanded options for non-employment related insurance while simultaneously maintaining the employer-based system, evidence from the implementation of the ACA can help us to understand how non-job-related access to insurance interacts with the employer-based system and what effects such access has on labor markets. This can shed light on what to expect in response to potential federal policy changes as well as potential state-level reforms that may take place if the ACA is repealed.

In this paper, we explore the effect of the Medicaid expansions on employer-based insurance. The expansions were the largest source of increases in coverage and are also the most plausibly exogenous source of variation with which to estimate a causal impact of a particular provision of the ACA.

We use the 2010-2015 Medical Expenditure Panel Survey-Insurance Component (MEPS-IC) and multivariate regression analysis to investigate how employer offers, workers’ eligibility, and out-of-pocket premiums are changing as a result of the Medicaid expansions. Each outcome is specified to depend on establishment characteristics; workforce characteristics; labor market conditions; whether or not the employer was located in a Medicaid expansion state and its interaction with the post-expansion period (e.g., 2014 or 2015); an indicator for whether the employer shared responsibility requirement applied to the employer (e.g., large firm in 2015), and state- and year fixed effects.

We find no evidence of a relationship between an employer being located in a Medicaid expansion state and the probability that an establishment offers insurance. Results also suggest that employers affected by the employer shared responsibility requirement increased their probability of offering insurance, although this result should be interpreted as an association versus a causal effect. Finally, our models suggest an overall negative trend in employer offers over time as indicated by the year fixed effects. Results for the out-of-pocket premium and worker eligibility outcomes are currently undergoing disclosure review by the Census Bureau.

Our preliminary evidence on the Medicaid expansions is in keeping with other work that finds little to no ACA effect on employment.