1932

Abstract

The Affordable Care Act (ACA) is one of the most important reforms of the US health insurance system since the introduction of Medicare. Because employment is a main source of health insurance for the working-age population in the USA, this sweeping health insurance reform has also had important implications for the labor market and the macro economy. In this article, we review the prototype models that are used in the macro and labor literature, extended to integrate health and health insurance, to study the short- and long-run consequences of the ACA. We also suggest open areas for future research.

Loading

Article metrics loading...

/content/journals/10.1146/annurev-economics-051420-115149
2022-08-12
2024-04-15
Loading full text...

Full text loading...

/deliver/fulltext/economics/14/1/annurev-economics-051420-115149.html?itemId=/content/journals/10.1146/annurev-economics-051420-115149&mimeType=html&fmt=ahah

Literature Cited

  1. Aiyagari SR. 1994. Uninsured idiosyncratic risk and aggregate saving. Q. J. Econ. 109:659–84
    [Google Scholar]
  2. Aizawa N. 2019. Labor market sorting and health insurance system design. Quant. Econ. 10:41401–51
    [Google Scholar]
  3. Aizawa N, Fang H. 2020. Equilibrium labor market search and health insurance reform. J. Political Econ. 128:64258–336
    [Google Scholar]
  4. Aizawa N, Fang H, Komatsu K. 2021. Union and insurance. Work. Pap., Univ. Wis./Univ. Pa.
  5. Aizawa N, Fu C. 2020. Interaction of the labor market and the health insurance system: employer-sponsored, individual, and public insurance NBER Work. Pap. 26713
  6. Ameriks J, Briggs J, Caplin A, Shapiro M, Tonetti C. 2020. Long-term-care utility and late-in-life saving. J. Political Econ. 128:62375–451
    [Google Scholar]
  7. Attanasio O, Kitao S, Violante GL. 2010. Financing Medicare: a general equilibrium analysis. Demography and the Economy JB Shoven 333–70 Chicago: Univ. Chicago Press
    [Google Scholar]
  8. Baicker K, Sommers B 2020. Insurance access and health care outcomes. The Trillion Dollar Revolution: How the Affordable Care Act Transformed Politics, Law and Health Care in America E Emanuel, A Gluck 209–24 New York: PublicAffairs
    [Google Scholar]
  9. Benabou R. 2002. Tax and education policy in a heterogeneous-agent economy: What levels of redistribution maximize growth and efficiency?. Econometrica 70:481–57
    [Google Scholar]
  10. Bewley T. 1986. Stationary monetary equilibrium with a continuum of independently fluctuating consumers. Contributions to Mathematical Economics in Honor of Gerard Debreu W Hildenbrand, A Mas-Colell 79–102 Amsterdam: North-Holland
    [Google Scholar]
  11. Bontemps C, Robin JM, Van den Berg GJ. 1999. An empirical equilibrium job search model with search on the job and heterogeneous workers and firms. Int. Econ. Rev. 40:11039–74
    [Google Scholar]
  12. Bontemps C, Robin JM, Van den Berg GJ. 2000. Equilibrium search with continuous productivity dispersion: theory and nonparametric estimation. Int. Econ. Rev. 41:2305–58
    [Google Scholar]
  13. Braun RA, Kopecky K, Koreshkova T 2017. Old, sick, alone and poor: a welfare analysis of old-age social insurance programs. Rev. Econ. Stud. 84:580–612
    [Google Scholar]
  14. Brown C, Medoff J. 1989. The employer size-wage effect. J. Political Econ. 97:51027–59
    [Google Scholar]
  15. Bruegemann B, Manovskii I. 2010. Fragility: a quantitative analysis of the US health insurance system Work. Pap., Univ. Pa. Philadelphia:
  16. Burdett K, Mortensen DT. 1998. Wage differentials, employer size, and unemployment. Int. Econ. Rev. 39:2257–73
    [Google Scholar]
  17. Capatina E. 2015. Life-cycle effects of health risks. J. Monet. Econ. 74:167–88
    [Google Scholar]
  18. Chandra A, Skinner J. 2012. Technology growth and expenditure growth in health care. J. Econ. Lit. 50:3645–80
    [Google Scholar]
  19. Chatterjee S, Corbae D, Nakajima M, Rios-Rull V. 2007. A quantitative theory of unsecured consumer credit with risk of default. Econometrica 75:61525–89
    [Google Scholar]
  20. Chen C, Feng Z, Gu J. 2020. Health, health insurance, and inequality. Work. Pap., York Univ./Univ. Neb./Univ. Toronto
  21. Chivers D, Feng Z, Villamil A. 2017. Employment-based health insurance and misallocation: implications for the macroeconomy. Rev. Econ. Dyn. 23:125–49
    [Google Scholar]
  22. CMS (Cent. Medicare Medicaid Serv.) 2019. Health insurance exchanges 2019 open enrollment report. Fact Sheet, March 25, CMS Washington, DC: https://www.cms.gov/newsroom/fact-sheets/health-insurance-exchanges-2019-open-enrollment-report
  23. CMS (Cent. Medicare Medicaid Serv.) 2021. National health expenditure data: historical Data Set, CMS Washington, DC: https://www.cms.gov/Research-Statistics-Data-and-Systems/Statistics-Trends-and-Reports/NationalHealthExpendData/NationalHealthAccountsHistorical
  24. Cole H, Kim S, Krueger D. 2019. Analysing the effects of insuring health risks: on the trade-off between short-run insurance benefits versus long-run incentive costs. Rev. Econ. Stud. 86:1123–69
    [Google Scholar]
  25. Colla C, Skinner J 2020. Has the ACA made health care more affordable? In The Trillion Dollar Revolution: How the Affordable Care Act Transformed Politics, Law and Health Care in America E Emanuel, A Gluck 250–63 New York: PublicAffairs
    [Google Scholar]
  26. Conesa JC, Costa D, Kamali P, Kehoe T, Nygaard V, Raveendranathan G, Saxena A. 2018. Macroeconomic effects of Medicare. J. Econ. Ageing 11:27–40
    [Google Scholar]
  27. Cox C, Semanskee A, Claxton G, Levitt L. 2016. Explaining health care reform: risk adjustment, reinsurance, and risk corridors Issue Brief, Kaiser Family Found. San Francisco: https://www.kff.org/health-reform/issue-brief/explaining-health-care-reform-risk-adjustment-reinsurance-and-risk-corridors/
  28. Currie J, Madrian BC. 1999. Health, health insurance and the labor market. Handb. Labor Econ. 3:3309–415
    [Google Scholar]
  29. Cutler D, Gruber J. 1996. Does public insurance crowd out private insurance?. Q. J. Econ. 111:2391–430
    [Google Scholar]
  30. Davila J, Hong J, Krusell P, Rios-Rull V. 2012. Constrained efficiency in the neoclassical growth model with uninsurable idiosyncratic shocks. Econometrica 80:62431–67
    [Google Scholar]
  31. De Nardi M, French E, Jones JB 2010. Why do the elderly save? The role of medical expenses. J. Political Econ. 118:139–75
    [Google Scholar]
  32. De Nardi M, French E, Pashchenko S, Porapakkarm P 2020. The lifetime costs of bad health NBER Work. Pap. 23963
  33. Deaton A. 1992. Understanding Consumption Oxford, UK: Clarendon
  34. Dey MS, Flinn CJ. 2005. An equilibrium model of health insurance provision and wage determination. Econometrica 73:2571–627
    [Google Scholar]
  35. Dey MS, Flinn CJ. 2008. Household search and health insurance coverage. J. Econom. 145:143–63
    [Google Scholar]
  36. Dizioli A, Pinheiro RB. 2016. Health insurance as a productive factor. Labour Econ. 40:1–24
    [Google Scholar]
  37. Ehrlich I, Yin Y. 2013. Equilibrium health spending and population aging in a model of endogenous growth: Will the GDP share of health spending keep rising?. J. Hum. Capital 7:4 https://doi.org/10.1086/675640
    [Crossref] [Google Scholar]
  38. Fang H 2016. Insurance markets for the elderly. Handbook of the Economics of Population Aging J Piggott, A Woodland 237–309 Amsterdam: Elsevier
    [Google Scholar]
  39. Fang H, Gavazza A. 2011. Dynamic inefficiencies in an employer-provided health insurance system: theory and evidence. Am. Econ. Rev. 101:73047–77
    [Google Scholar]
  40. Fang H, Larroucau T, Shephard A. 2021. The Affordable Care Act and automation Work. Pap., Univ. Pa. Philadelphia:
  41. Fang H, Shephard A. 2019. Joint labor search, spousal insurance, and health care reform NBER Work. Pap. 26350
  42. Fehr H, Feldman M. 2021. Financing universal health care: premium or payroll taxes? Work. Pap., Univ. Würzberg Würzberg, Ger:.
  43. Feng Z, Zhao K. 2018. Employment-based health insurance and aggregate labor supply. J. Econ. Behav. Organ. 154:156–74
    [Google Scholar]
  44. Ferreira PC, Gomes DB. 2017. Health care reform or more affordable health care?. J. Econ. Dyn. Control 79:C126–53
    [Google Scholar]
  45. Finkelstein A. 2007. The aggregate effects of health insurance: evidence from the introduction of Medicare. Q. J. Econ. 122:11–37
    [Google Scholar]
  46. Fonseca R, Michaud PC, Galama T, Kapteyn A. 2021. Accounting for the rise of health spending and longevity. J. Eur. Econ. Assoc. 19:1536–79
    [Google Scholar]
  47. Frankovic I, Kuhn M. 2019. Access to health care, medical progress and the emergence of the longevity gap: a general equilibrium analysis. J. Econ. Ageing 14:100188
    [Google Scholar]
  48. Frankovic I, Kuhn M, Wrzaczek S. 2020. Medical innovation and its diffusion: implications for economic performance and welfare. J. Macroecon. 66:103262
    [Google Scholar]
  49. Frean M, Gruber J, Sommers BD. 2017. Premium subsidies, the mandate, and Medicaid expansion: coverage effects of the Affordable Care Act. J. Health Econ. 53:72–86
    [Google Scholar]
  50. Freeman R, Medoff J. 1984. What Do Unions Do? New York: Basic
  51. French E. 2005. The effects of health, wealth, and wages on labor supply and retirement behaviour. Rev. Econ. Stud. 72:2395–427
    [Google Scholar]
  52. French E, Jones JB. 2011. The effects of health insurance and self-insurance on retirement behavior. Econometrica 79:3693–732
    [Google Scholar]
  53. French E, Jones JB, von Gaudecker HM 2017. The effect of the Affordable Care Act on the labor supply, savings, and social security of older Americans. Work. Pap., Univ. Coll. London London, UK:
  54. Galama T, Kapteyn A, Fonseca R, Michaud PC. 2013. A health production model with endogenous retirement. Health Econ. 22:8883–902
    [Google Scholar]
  55. Gallen TS, Mulligan CB. 2018. Wedges, labor market behavior, and health insurance coverage under the Affordable Care Act. Natl. Tax J. 71:175–120
    [Google Scholar]
  56. Garrett B, Kaestner R, Gangopadhyaya A. 2017. Recent evidence on the ACA and employment: Has the ACA been a job killer? 2016 update. Policy Brief, Urban Inst./Robert Wood Johnson Found. Washington, DC:
  57. Gokhale J, Smetters K. 2006. Fiscal and generational imbalances: an update. Tax Policy Econ. 20:193–223
    [Google Scholar]
  58. Greenwood J, Hercowitz Z, Huffman G. 1988. Investment, capacity utilization, and the real business cycle. Am. Econ. Rev. 78:3402–17
    [Google Scholar]
  59. Gross T, Notowidigdo M. 2011. Health insurance and the consumer bankruptcy decision: evidence from expansions of Medicaid. J. Public Econ. 95:7–8767–78
    [Google Scholar]
  60. Grossman M. 1972. On the concept of health capital and the demand for health. J. Political Econ. 80:2223–55
    [Google Scholar]
  61. Gruber J, Madrian BC. 1994. Health insurance and job mobility: the effects of public policy on job-lock. Ind. Labor Relat. Rev. 48:186–102
    [Google Scholar]
  62. Guler B, Guvenen F, Violante GL. 2012. Joint-search theory: new opportunities and new frictions. J. Monet. Econ. 59:4352–69
    [Google Scholar]
  63. Hall RE, Jones CI. 2007. The value of life and the rise in health spending. Q. J. Econ. 122:139–72
    [Google Scholar]
  64. Halliday TJ, He H, Ning L, Zhang H. 2019. Health investment over the life cycle. Macroecon. Dyn. 23:1178–215
    [Google Scholar]
  65. Handel B, Kolstad J. 2022. The Affordable Care Act after a decade: industrial organization of the insurance exchange. Annu. Rev. Econ. 14:287312
    [Google Scholar]
  66. Hansen GD, Hsu M, Lee J. 2014. Health insurance reform: the impact of a Medicare buy-in. J. Econ. Dyn. Control 45:C315–29
    [Google Scholar]
  67. Heathcote J, Storesletten K, Violante GL. 2014. Consumption and labor supply with partial insurance: an analytical framework. Am. Econ. Rev. 104:72075–126
    [Google Scholar]
  68. Heim B, Lurie I, Simon K. 2014. The impact of the Affordable Care Act young adult provision on labor market outcomes: evidence from tax data. Tax Policy Econ. 29:1133–57
    [Google Scholar]
  69. Heim B, Lurie I, Simon K. 2018. Did the Affordable Care Act young adult provision affect labor market outcomes? Analysis using tax data. Ind. Labor Relat. Rev. 71:51154–78
    [Google Scholar]
  70. Hsu M, Lee J. 2013. The provision of public universal health insurance: impacts on private insurance, asset holdings, and welfare. Macroecon. Dyn. 17:61252–80
    [Google Scholar]
  71. Huggett M. 1993. The risk-free rate in heterogeneous-agent incomplete-insurance economies. J. Econ. Dyn. Control 17:5/6953–69
    [Google Scholar]
  72. Hugonnier J, Pelgrin F, St-Amour P. 2013. Health and (other) asset holdings. Rev. Econ. Stud. 80:2663–710
    [Google Scholar]
  73. Hwang H, Mortensen D, Reed WR. 1998. Hedonic wages and labor market search. J. Labor Econ. 16:4815–47
    [Google Scholar]
  74. Imrohoruglu A. 1989. Cost of business cycles with indivisibilities and liquidity constraints. J. Political Econ. 97:61364–83
    [Google Scholar]
  75. Jeske K, Kitao S. 2009. U.S. tax policy and health insurance demand: Can a regressive policy improve welfare?. J. Monet. Econ. 56:2210–21
    [Google Scholar]
  76. Jones JB, Li Y. 2018. The effects of collecting income taxes on Social Security benefits. J. Public Econ. 159:128–45
    [Google Scholar]
  77. Jung J, Shrestha V. 2018. The Affordable Care Act and college enrollment decisions. Econ. Inq. 56:41980–2009
    [Google Scholar]
  78. Jung J, Tran C. 2016. Market inefficiency, insurance mandate and welfare: U.S. health care reform 2010. Rev. Econ. Dyn. 20:132–59
    [Google Scholar]
  79. Jung J, Tran C. 2017. Aging and health financing in the U.S.: a general equilibrium analysis. Eur. Econ. Rev. 100:428–62
    [Google Scholar]
  80. Jung J, Tran C. 2020. Health risk, insurance and optimal progressive income taxation. Work. Pap. 2017-01 Towson Univ. Towson, MD:
  81. Kaestner R, Garrett B, Chen J, Gangopadhyaya A, Fleming C. 2017. Effects of ACA Medicaid expansions on health insurance coverage and labor supply. J. Policy Anal. Manag. 36:3608–42
    [Google Scholar]
  82. Kaiser Family Found 2019. Health insurance coverage of the total population Data Table, Kaiser Family Found San Francisco: https://www.kff.org/other/state-indicator/total-population
  83. Kaiser Family Found 2020. Marketplace effectuated enrollment and financial assistance Data Table, Kaiser Family Found. San Francisco: https://www.kff.org/other/state-indicator/effectuated-marketplace-enrollment-and-financial-assistance
  84. Kaiser Family Found., Health Res. Educ. Trust 2009. Employer health benefits Annu. Surv., Kaiser Family Found. San Francisco: http://ehbs.kff.org/2009.html
  85. Khwaja A, White M. 2021. Health insurance reform and the (re-)distribution of welfare: a dynamic structural analysis of heterogeneity in willingness to pay for the Affordable Care Act. Work. Pap., Univ. Cambridge Cambridge, UK:
  86. King v. Burwell, 576 U.S. 473 2015.)
  87. Koijen RSJ, Philipson TJ, Uhlig H. 2016. Financial health economics. Econometrica 84:1195–242
    [Google Scholar]
  88. Krueger D, Ludwig A, Villalvazo S. 2021. Optimal taxes on capital in the OLG model with uninsurable idiosyncratic income risk. J. Public Econ. 201:104491
    [Google Scholar]
  89. Kucko K, Rinz K, Solow B. 2017. Labor market effects of the Affordable Care Act: evidence from a tax notch. CARRA Work. Pap. 2017-07 Cent. Econ. Stud., US Census Bur. Washington, DC:
  90. Li Y. 2015. The Affordable Care Act and disability insurance. Work. Pap., State Univ. N. Y. Albany:
  91. Lucas R. 1988. On the mechanics of economic development. J. Monet. Econ. 22:3–42
    [Google Scholar]
  92. Lurie I, Sacks DW, Heim B. 2021. Does the individual mandate affect insurance coverage? Evidence from tax returns. Am. Econ. J. Econ. Policy 13:2378–407
    [Google Scholar]
  93. Lyons S. 2017. Are employer mandates to offer health insurance effective in reducing subsidized coverage crowd-out of employer-sponsored insurance?. Am. J. Health Econ. 3:3370–91
    [Google Scholar]
  94. Madrian BC. 1994. Employment-based health insurance and job mobility: Is there evidence of job-lock?. Q. J. Econ. 109:27–54
    [Google Scholar]
  95. Mortensen DT, Pissarides CA. 1994. Job creation and job destruction in the theory of unemployment. Rev. Econ. Stud. 61:3397–415
    [Google Scholar]
  96. Moscarini G, Postel-Vinay F. 2013. Stochastic search equilibrium. Rev. Econ. Stud. 80:41541–81
    [Google Scholar]
  97. Mulligan CB. 2013. Average marginal labor income tax rates under the Affordable Care Act NBER Work. Pap. 19365
  98. Mullligan CB. 2014. Effects of the Affordable Care Act on economic productivity. Imprimis 43:111–5 https://imprimis.hillsdale.edu/wp-content/uploads/2016/10/Imprimis-Effects-of-the-Affordable-Care-Act-on-Economic-Productivity-Nov-2014.pdf
    [Google Scholar]
  99. Mulligan CB. 2015. The new full-time employment taxes. Tax Policy Econ. 29:189–132
    [Google Scholar]
  100. Mulligan CB. 2018. The Affordable Care Act and the new economics of part-time work. Res. Pap., Mercatus Cent. Arlington, VA:
  101. Nakajima M, Tuzeman D. 2017. Health care reform or labor market reform? A quantitative analysis of the Affordable Care Act. Res. Work. Pap. 15-10 Fed. Reserve Bank Kansas City, MO:
  102. National Federation of Independent Business v. Sebelius, 567 U.S.. 519 2012.)
  103. Orzag P, Rekhi R 2020. Policy design: tensions and tradeoffs. The Trillion Dollar Revolution: How the Affordable Care Act Transformed Politics, Law and Health Care in America E Emanuel, A Gluck 47–65 New York: PublicAffairs
    [Google Scholar]
  104. Ozkan S. 2017. Preventive versus curative medicine: a macroeconomic analysis of health care over the life cycle. Work. Pap., Univ. Toronto Toronto, Can:.
  105. Pacheco J, Haselswerdt J, Michener J. 2020. The Affordable Care Act and polarization in the United States. Russell Sage Found. . J. Soc. Sci. 6:2114–30
    [Google Scholar]
  106. Palumbo M. 1999. Uncertain medical expenses and precautionary saving near the end of the life cycle. Rev. Econ. Stud. 66:395–421
    [Google Scholar]
  107. Pashchenko S, Porapakkarm P. 2013. Quantitative analysis of health insurance reform: separating regulation from redistribution. Rev. Econ. Dyn. 16:3383–404
    [Google Scholar]
  108. Prados MJ. 2018. Health and earnings inequality over the life cycle: the redistributive potential of health policies. Work. Pap., Univ. South. Calif. Los Angeles:
  109. See K. 2019. “Medicare for all'': the macroeconomic and welfare consequences of expanding public health insurance Work. Pap., Bank Can. Ottawa:
  110. Selden T, Gray BM. 2006. Tax subsidies for employer-related health insurance: estimates for 2006. Health Aff. 25:21568–79
    [Google Scholar]
  111. Tax Policy Cent 2021. What are the largest tax expenditures? Brief. Book, Tax Policy Cent., Urban Inst./Brookings Inst Washington, DC: https://www.taxpolicycenter.org/briefing-book/what-are-largest-tax-expenditures
  112. Tebaldi P. 2017. Estimating equilibrium in health insurance exchanges: price competition and subsidy design under the ACA. Work. Pap. 2017-05 Becker Friedman Inst. Res. Econ. Chicago:
  113. Todd P, Wolpin KI. 2010. Structural estimation and policy evaluation in developing countries. Annu. Rev. Econ. 2:21–50
    [Google Scholar]
  114. Towers Watson, Natl. Bus. Group 2013. Reshaping health care: best performers leading the way. 18th Annu. Surv., Towers Watson/Natl. Bus. Group Washington, DC:
  115. Tsujiyama H. 2013. Implications of health care reform for inequality and welfare. Work. Pap., Univ. Frankfurt Frankfurt, Ger:.
  116. US Treasury 2021. Policy issues: tax expenditures Data Tables, US Treasury Washington, DC: https://home.treasury.gov/policy-issues/tax-policy/tax-expenditures
  117. Yogo M. 2016. Portfolio choice in retirement: health risk and the demand for annuities, housing and risky assets. J. Monet. Econ. 80:17–34
    [Google Scholar]
  118. Zhang Y. 2021. Cost-sharing reduction subsidy: who benefits and how it should be financed. Work. Pap., Univ. Pa. Philadelphia:
  119. Zhao K. 2014. Social Security and the rise in health spending. J. Monet. Econ. 64:21–37
    [Google Scholar]
  120. Zhao K. 2017. Social insurance, private health insurance and individual welfare. J. Econ. Dyn. Control 78:102–17
    [Google Scholar]
/content/journals/10.1146/annurev-economics-051420-115149
Loading
/content/journals/10.1146/annurev-economics-051420-115149
Loading

Data & Media loading...

  • Article Type: Review Article
This is a required field
Please enter a valid email address
Approval was a Success
Invalid data
An Error Occurred
Approval was partially successful, following selected items could not be processed due to error