The Impact of Obamacare on Firm Employment and Performance: Theory and Evidence

58 Pages Posted: 21 Nov 2017 Last revised: 30 Jan 2020

See all articles by Heitor Almeida

Heitor Almeida

University of Illinois at Urbana-Champaign; National Bureau of Economic Research (NBER)

Ruidi Huang

Southern Methodist University (SMU) - Finance Department

Ping Liu

Krannert School of Management, Purdue University

Yuhai Xuan

University of California, Irvine - Paul Merage School of Business

Date Written: January 30, 2020

Abstract

We study the impact of the Patient Protection and Affordable Care Act (PPACA, or Obamacare) on firm employment and performance using hand-collected firm-level employee health insurance data. PPACA is associated with a significant increase in health insurance premia for employees in company-sponsored health insurance plans. We show theoretically and empirically that employers with higher employee coverage on their health insurance plans prior to the PPACA reduce enrollment in these plans after the law was enacted. In addition, the reduction in employer-sponsored health insurance plan enrollment is more pronounced for employers that used to offer basic, low cost health insurance plans to their employees. We also find suggestive evidence that firms reduce enrollment by shifting their employment composition from full-time employees to part-time, temporary, or seasonal workers, who are not covered in employer-sponsored health insurance plans. We do not find any evidence of deterioration in performance at companies that were more exposed to PPACA.

Suggested Citation

Almeida, Heitor and Huang, Ruidi and Liu, Ping and Xuan, Yuhai, The Impact of Obamacare on Firm Employment and Performance: Theory and Evidence (January 30, 2020). Available at SSRN: https://ssrn.com/abstract=3073378 or http://dx.doi.org/10.2139/ssrn.3073378

Heitor Almeida (Contact Author)

University of Illinois at Urbana-Champaign ( email )

515 East Gregory Drive
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Champaign, IL 61820
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217-3332704 (Phone)

HOME PAGE: http://www.business.illinois.edu/FacultyProfile/faculty_profile.aspx?ID=11357

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
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Ruidi Huang

Southern Methodist University (SMU) - Finance Department ( email )

United States

Ping Liu

Krannert School of Management, Purdue University ( email )

1310 Krannert Building
West Lafayette, IN 47907-1310
United States
7654944691 (Phone)

Yuhai Xuan

University of California, Irvine - Paul Merage School of Business ( email )

4291 Pereira Drive
Irvine, CA California 92697-3125
United States

HOME PAGE: http://yuhai.merage.uci.edu/

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