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Equilibrium Labor Market Search and Health Insurance Reform

Author

Listed:
  • Naoki Aizawa
  • Hanming Fang

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. We use our estimated model to evaluate the equilibrium impact of many health care reform proposals, including the 2010 Affordable Care Act (ACA). We use the estimates of the early impact of the ACA as a model validation. We find that income-based subsidies for health insurance premiums are crucial for the sustainability of the ACA, while the ACA can still substantially reduce the uninsured rate without the individual or the employer mandate.

Suggested Citation

  • Naoki Aizawa & Hanming Fang, 2020. "Equilibrium Labor Market Search and Health Insurance Reform," Journal of Political Economy, University of Chicago Press, vol. 128(11), pages 4258-4336.
    • Handle: RePEc:ucp:jpolec:doi:10.1086/710535
    DOI: 10.1086/710535
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    JEL classification:

    • G22 - Financial Economics - - Financial Institutions and Services - - - Insurance; Insurance Companies; Actuarial Studies
    • I11 - Health, Education, and Welfare - - Health - - - Analysis of Health Care Markets
    • I13 - Health, Education, and Welfare - - Health - - - Health Insurance, Public and Private
    • J32 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Nonwage Labor Costs and Benefits; Retirement Plans; Private Pensions

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