The ACA: Some Unpleasant Welfare Arithmetic

32 Pages Posted: 7 Apr 2014 Last revised: 8 Apr 2014

See all articles by Casey B. Mulligan

Casey B. Mulligan

University of Chicago; National Bureau of Economic Research (NBER)

Date Written: March 2014

Abstract

Under the Affordable Care Act, between six and eleven million workers would increase their disposable income by cutting their weekly work hours. About half of them would primarily do so by making themselves eligible for the ACA's federal assistance with health insurance premiums and out-of-pocket health costs, despite the fact that subsidized workers are not able to pay health premiums with pre-tax dollars. The remainder would do so primarily by relieving their employers from penalties, or the threat of penalties, pursuant to the ACA's employer mandate. Women, especially those who are not married, are more likely than men to have their short-term financial reward to full-time work eliminated by the ACA. Additional workers, beyond the six to eleven million, could increase their disposable income by using reduced hours to climb one of the "cliffs" that are part of the ACA's mapping from household income to federal assistance.

Suggested Citation

Mulligan, Casey B., The ACA: Some Unpleasant Welfare Arithmetic (March 2014). NBER Working Paper No. w20020. Available at SSRN: https://ssrn.com/abstract=2421080

Casey B. Mulligan (Contact Author)

University of Chicago ( email )

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