Equilibrium Labor Market Search and Health Insurance Reform

Naoki Aizawa () and Hanming Fang
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Naoki Aizawa: Department of Economics, University of Pennsylvania

PIER Working Paper Archive from Penn Institute for Economic Research, Department of Economics, University of Pennsylvania

Abstract: We present and empirically implement an equilibrium labor market search model where risk averse workers facing medical expenditure shocks are matched with firms making health insurance coverage decisions. Our model delivers a rich set of predictions that can account for a wide variety of phenomenon observed in the data including the correlations among firm sizes, wages, health insurance offering rates, turnover rates and workers' health compositions. We estimate our model by Generalized Method of Moments using a combination of micro data sources including Survey of Income and Program Participation (SIPP), Medical Expenditure Panel Survey (MEPS) and Robert Wood Johnson Foundation Employer Health Insurance Survey. We use our estimated model to evaluate the equilibrium impact of the 2010 Affordable Care Act (ACA) and find that it would reduce the uninsured rate among the workers in our estimation sample from 20.12% to 7.27%. We also examine a variety of alternative policies to understand the roles of different components of the ACA in contributing to these equilibrium changes. Interestingly, we find that the uninsured rate will be even lower (at 6.44%) if the employer mandate in the ACA is eliminated.

Keywords: Health; Health Insurance; Health Care Reform; Labor Market Equilibrium (search for similar items in EconPapers)
JEL-codes: G22 I11 I13 J32 (search for similar items in EconPapers)
Pages: 61 pages
Date: 2013-01-10
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Citations: View citations in EconPapers (28)

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Related works:
Journal Article: Equilibrium Labor Market Search and Health Insurance Reform (2020)
Working Paper: Equilibrium Labor Market Search and Health Insurance Reform (2015)
Working Paper: Equilibrium Labor Market Search and Health Insurance Reform (2013)
Working Paper: Equilibrium Labor Market Search and Health Insurance Reform (2012)
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