Nearly a million employees could drop out of the work force when new, cheaper health care options are officially offered to U.S. residents, a new study finds.
Research predicts that as a consequence of the Affordable Care Act, between 500,000 and 900,000 Americans may choose to stop working because they are no longer dependent on their employers for health insurance. Provisions offering cheaper health care options are set to go into effect starting Oct. 1.
"When the Affordable Care Act is enacted, it's possible that hundreds of thousands of people may choose to leave the labor force or retire earlier than they otherwise would have because they now have access to health insurance outside of their jobs," said Craig Garthwaite of Northwestern University.
Economists from Northwestern, Columbia University and the University of Chicago conducted the study.
Researchers came to their conclusions after studying data from the state of Tennessee's public health insurance program, called TennCare. The program provided coverage for uninsured and uninsurable adults regardless of age, income or family status.
Specifically, the researchers examined what happened when the program was eliminated due to budgetary constraints in 2005, nine years after it was first enacted.
In an analysis of employment records in Tennessee, the researchers determined that close to half of the 170,000 who lost TennCare coverage went on to find insurance through an employer. Moreover, 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," said Tal Gross of Columbia University. "For them, the perk matters more than the paycheck."
The authors refer to this as "employment lock," the idea that people must keep working so they can keep their health insurance. They believe this occurs because the individual market for health insurance is so expensive for single people to obtain coverage that they opt to find a job instead.
"The fact that people are working solely to get health insurance signals a failure of the private health insurance market," said the University of Chicago's Matthew Notowidigdo.
With Medicaid rapidly expanding later this year under the Affordable Care Act, the researchers foresee that what occurred in Tennessee could happen in reverse: the option of public health insurance may lead some Americans to retire or to leave their jobs.
They don't believe this makes the Affordable Care Act a "job killer," as some have suggested. Instead, they say it provides an alternative way to procure health insurance that doesn't require people to work for the benefit.
Researchers said the full impact of the Affordable Care Act on the jobs picture will only become apparent after it is put in place and that results will vary geographically as some states are choosing to opt-out of the Medicaid expansion.
"There is little doubt that the ACA will affect the employment picture," Gross said. "Historically, health insurance in the United States has been tightly linked to employment, and the ACA weakens that link."
The study was recently distributed by the National Bureau of Economic Research.