Health Insurance and the Earnings Stability of Low-Income Households

70 Pages Posted: 12 Jan 2018 Last revised: 20 Oct 2018

See all articles by Emily Gallagher

Emily Gallagher

University of Colorado at Boulder - Department of Finance; Federal Reserve Banks - Federal Reserve Bank of St. Louis

Stephen Roll

John Glenn College of Public Affairs

Rourke O'Brien

Harvard University

Michal Grinstein-Weiss

University of North Carolina (UNC) at Chapel Hill; Washington University in St. Louis

Date Written: November 21, 2017

Abstract

We evaluate the effect of health insurance on negative earnings shocks using the administrative tax data and survey responses of 4,975 low-income households. We exploit exogenous variation in the cost of private insurance under the Affordable Care Act using a regression discontinuity (RD) design. Eligibility to purchase subsidized private insurance is associated with a 29 and 22 percent decline in the rates of unexpected job loss and income loss, respectively. Effects are concentrated among households with past health costs and exist only for “unexpected” forms of earnings variation, suggesting a health-productivity link. Rudimentary calculations based on our RD estimate imply a $256-$476 per year welfare benefit of health insurance in terms of reduced exposure to job loss.

Keywords: regression discontinuity, Affordable Care Act, subsidies, labor supply, income volatility, productivity

JEL Classification: D10, H51, I13, J22

Suggested Citation

Gallagher, Emily and Roll, Stephen and O'Brien, Rourke and Grinstein-Weiss, Michal, Health Insurance and the Earnings Stability of Low-Income Households (November 21, 2017). Available at SSRN: https://ssrn.com/abstract=3098430 or http://dx.doi.org/10.2139/ssrn.3098430

Emily Gallagher (Contact Author)

University of Colorado at Boulder - Department of Finance ( email )

Campus Box 419
Boulder, CO 80309
United States

Federal Reserve Banks - Federal Reserve Bank of St. Louis ( email )

411 Locust St
Saint Louis, MO 63011
United States

Stephen Roll

John Glenn College of Public Affairs ( email )

110 Page Hall
1810 College Road
Columbus, OH 43210
United States

Rourke O'Brien

Harvard University ( email )

1875 Cambridge Street
Cambridge, MA 02138
United States

Michal Grinstein-Weiss

University of North Carolina (UNC) at Chapel Hill ( email )

102 Ridge Road
Chapel Hill, NC NC 27514
United States

Washington University in St. Louis ( email )

One Brookings Drive
Campus Box 1208
Saint Louis, MO MO 63130-4899
United States

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