Full Citation
Title: The Affordable Care Act in an Economy with Public Disability Insurance
Citation Type: Miscellaneous
Publication Year: 2013
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Abstract: This paper examines the eff ects of the Aff ordable Care Act (ACA) by considering an important interaction between health insurance and disability insurance, which has received little attention in prior literature. Since the ACA provides insurance coverage to the otherwise uninsured, it encourages this group's health investment and reduces their demand for disability insurance later in life. In order to capture this dynamic linkage, the paper extends the Bewley-Huggett-Aiyagari incomplete markets model by endogenizing health accumulation, insurance and disability decisions. The model is calibrated to match the 2006 U.S. economy and used to examine the influence of three main components of the ACA: Medicaid expansion, insurance subsidies, and the individual mandate. Findings suggest that the ACA raises tax rates, but reduces the fraction of working-age people receiving disability benefits from 5.7 to 4.9 percent. The associated increase of labor force participation o sets the reduction of working hours and capital, and causes a rise of output by 0.2 percent. Furthermore, for every 100 dollars the government spends on the ACA, it saves 32 dollars on disability insurance and 8 dollars on Medicare for people with disability, and raises revenue by 7 dollars with a fi xed tax rate. Importantly, after adding the disability dimension, a health care reform without Medicaid expansion reduces total tax burdens.
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Authors: Li, Yue
Publisher: University of Pittsburgh
Data Collections: IPUMS CPS
Topics: Health, Other
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