Health Insurance as an Income Stabilizer

69 Pages Posted: 29 Apr 2020

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

Nathan Blascak

Federal Reserve Bank of Philadelphia

Stephen Roll

Washington University in St. Louis

Michal Grinstein-Weiss

Washington University in St. Louis - George Warren Brown School of Social Work

Date Written: January, 2020

Abstract

We evaluate the effect of health insurance on the incidence of negative income shocks using the tax data and survey responses of nearly 14,000 low income households. Us-ing a regression discontinuity (RD) design and variation in the cost of nongroup pri-vate health insurance under the Affordable Care Act, we find that eligibility for sub-sidized Marketplace insurance is associated with a 16% and 9% 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. Calculations based on our fuzzy RD estimate imply a $256 to $476 per year welfare benefit of health insurance in terms of reduced exposure to job loss.

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

JEL Classification: D10, J22, G52, H51, G51, I13

Suggested Citation

Gallagher, Emily and Blascak, Nathan and Roll, Stephen and Grinstein-Weiss, Michal, Health Insurance as an Income Stabilizer (January, 2020). Available at SSRN: https://ssrn.com/abstract=3587647 or http://dx.doi.org/10.21799/frbp.wp.2020.05

Emily Gallagher

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

Nathan Blascak (Contact Author)

Federal Reserve Bank of Philadelphia ( email )

Ten Independence Mall
Philadelphia, PA 19106-1574
United States

Stephen Roll

Washington University in St. Louis ( email )

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

Michal Grinstein-Weiss

Washington University in St. Louis - George Warren Brown School of Social Work ( email )

St. Louis, MO 63130
United States

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