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Title: Labor Market Mobility and Differential Selection in Health Insurance: Evidence from the ACA Marketplaces
Citation Type: Working Paper
Publication Year: 2022
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Abstract: Health insurance and employment are often bundled choices for U.S. workers. For individuals without access to employer-sponsored insurance, the AAordable Care Act (ACA) marketplaces provide them with a source of coverage and premium subsidies, potentially lowering the costs of labor market transitions. This paper examines the relationship between labor market mobility and risk composition on these marketplaces. I document that labor and ACA markets interact through individuals' health risks: individuals with labor market transitions are advantageously selected relative to non-transitioners; however, among the transi-tioners, ACA plan enrollees are adversely selected. To study how these diierential selection patterns aaect outcomes in the labor and ACA markets, I develop and estimate a model of labor market transitions, selection into the ACA market segment, and insurance plan demand. Focusing on one large market, I Ind that labor market transitioners reduce adverse selection on net: their participation slightly lowers average costs and eeective premiums, relative to a counterfactual in which labor transitions do not interact with ACA segment participation. I then examine alternative subsidy designs using the model. Less generous subsidies generally worsen adverse selection, increase eeective premiums and uninsurance rate, and decrease labor market transition rates, while enhanced subsidies (e.g. under the Innation Reduction Act) have the opposite eeects. While workers beneet from the availability of subsidized ACA plans on average, the sicker, less educated, or having lower income beneet more, highlighting the ACA's safety net value.
Url: https://scholar.harvard.edu/files/yinweisoon/files/YinWeiSoon_JMPweb.pdf
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Authors: Soon, Yin Wei
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Pages: 1-60
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Data Collections: IPUMS USA
Topics: Health, Labor Force and Occupational Structure, Population Health and Health Systems
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