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Title: The Effects of the Massachusetts Health Reform on Income and Labor Force Participation

Citation Type: Journal Article

Publication Year: 2019

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Abstract: In 2006, Massachusetts passed the Massachusetts Health Reform, which has led to nearly universal health insurance coverage in the state. Using IPUMS USA census data, I estimate a difference-indifferences regression with New Hampshire as my control state to consider the impact of the Massachusetts Health Reform on income and labor force participation. I find a significant increase in labor force participation but no significant change in income. The lack of a decrease in income establishes that the Massachusetts Health Reform increased welfare and utility, and the increase in labor force participation shows that expanding Medicaid and private insurance has a net positive effect. With rising costs in the healthcare industry, healthcare reform is an urgent concern in the United States. Despite spending 17% of its GDP each year on healthcare, the United States remains a disappointing thirty-first in average life expectancy among all countries (World Health Organization 2018). Are there are steps we can take to improve our health outcomes? Considering the growing desire for single-payer systems in the United States (such as the Healthy California Act), I consider the implications of government healthcare reform. Specifically, I explore the effects of the Massachusetts Health Reform on income and labor force participation (LFP). In 2006, Massachusetts passed the Massachusetts Health Reform to make health insurance available to nearly all its citizens. The law includes an individual mandate, an employer mandate, and a Medicaid expansion. Therefore, all citizens are required to purchase health insurance or pay monthly fees, and employers of more than ten people must either provide insurance or contribute to paying their employees' insurance premiums. The plan expands "MassHealth," the Massachusetts Medicaid program, increases subsidies for low-income citizens, and establishes less expensive small-group insurance markets (McDonough et al., 2008). As of 2010, the reform had led to a 42 percent decrease in the proportion of uninsured residents in Massachusetts, compared to a 7.6 percent increase in the proportion of uninsured residents nationally ("Massachusetts", 2012). Residents have witnessed increased access to primary care services along with a simultaneous increase in per capita health spending by the Massachusetts government ("Massachusetts", 2012). Because health insurance, health, and income are related, the reform should have affected income in Massachusetts. 1 Additionally, the pressures placed on citizens and employers through the mandates and Medicaid expansion should affect LFP. Arguments against health care reform often focus on its effects on the financial wellbeing of individuals (Straw et al., 2017). Because the reform in Massachusetts increased access to both private and public insurance markets, I determine whether it increased or decreased income and LFP.

Url: http://econjournal.terry.uga.edu/index.php/UGAJUE/article/view/32

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Authors: Abernathy, Brendan

Periodical (Full): UGA Journal of Economics

Issue: 2

Volume: 1

Pages:

Data Collections: IPUMS USA

Topics: Health, Labor Force and Occupational Structure

Countries: United States