How Does Health Insurance Affect Firm Employment and Performance? Evidence from Obamacare

56 Pages Posted: 21 Nov 2017 Last revised: 21 Nov 2023

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: November 16, 2022

Abstract

This paper studies how mandating employers to provide health insurance of a minimum quality and the associated increases in health insurance premia affect firm employment and performance. Using hand-collected firm-level employee health insurance data around the passage of the Patient Protection and Affordable Care Act (PPACA), we show that the PPACA is associated with a significant increase in health insurance premia for employees in company-sponsored health insurance plans. In response, employers with greater exposure to the PPACA reduce enrollments in their health insurance plans to a larger extent after the law was enacted. We also find evidence that employers achieve this reduction in enrollment by shifting 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 the increase in health insurance premia, perhaps because these companies adjust to the new regulation by changing the composition of employment towards part-time employees.

Suggested Citation

Almeida, Heitor and Huang, Ruidi and Liu, Ping and Xuan, Yuhai, How Does Health Insurance Affect Firm Employment and Performance? Evidence from Obamacare (November 16, 2022). 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
4037 BIF
Champaign, IL 61820
United States
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
United States

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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