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Report: Affordable Care Act Could Cause People to Leave Their Jobs

New study makes predictions based on 2005 Medicaid cuts in Tennessee (July 15)

As a consequence of the Patient Protection and Affordable Care Act (PPACA), between 500,000 and 900,000 Americans may choose to stop working. That possibility is predicted in a new analysis of an analogous situation in reverse: the abrupt end of Tennessee’s Medicaid expansion in 2005. That year, Tennessee dropped 170,000 of its citizens from Medicaid. It was the largest Medicaid disenrollment in the history of the program.

Economists at Columbia University, Northwestern University, and the University of Chicago have released their analysis online.

In 1994, Tennessee expanded its Medicaid public health insurance program, called TennCare, to provide for uninsured and uninsurable adults regardless of age, income, or family status. As a result, Tennessee’s Medicaid program became one of the most generous in the country. But the program was ended 9 years later, in 2005, largely because of budgetary constraints. Approximately 170,000 residents lost coverage.

Those left without coverage were disproportionately single, childless adults with incomes slightly higher than the federal poverty line. That population is similar to uninsured Americans who are likely to gain coverage under the PPACA.

In an analysis of employment records in Tennessee, the researchers determined that close to half of those who lost TennCare coverage in 2005 went on to find insurance through an employer. Moreover, the researchers found that as soon as TennCare coverage ended, there was a spike in Google searches for “job openings” in the state of Tennessee.

The authors call this phenomenon “employment lock” — the idea that people must keep working so they can keep their health insurance.

With Medicaid rapidly expanding under the PPACA, the researchers foresee that such a progression could happen in reverse: the option of public health insurance may lead some Americans to retire or to leave their jobs. This doesn’t make the new health care law a “job killer,” as some have suggested; it just provides an alternative way to procure health insurance that doesn’t require people to “work for the perk,” the authors say.

“When the Affordable Care Act is enacted, it’s possible that hundreds of thousands of people may choose to leave the labor force or to retire earlier than they otherwise would have because they now have access to health insurance outside of their jobs,” explains study co-author Craig Garthwaite, PhD. “It’s giving people important options that otherwise wouldn’t exist without the [PP]ACA.”

The full impact of the PPACA on the jobs picture will be apparent only after it is put in place. And results will vary geographically, as some states are choosing to opt out of the Medicaid expansion. Regardless, the PPACA will be on a much bigger scale than the Tennessee Medicaid contraction and will affect a greater proportion of the population.

“There is little doubt that the [PP]ACA will affect the employment picture,” said co-author Tal Gross, PhD. “Historically, health insurance in the United States has been tightly linked to employment, and the [PP]ACA weakens that link.”

Source: Columbia University Mailman School of Public Health; July 15, 2013.

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