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Health Insurance as an Income Stabilizer

Author

Listed:
  • Nathan Blascak
  • Emily Gallagher
  • Michal Grinstein-Weiss
  • Stephen Roll

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.

Suggested Citation

  • Nathan Blascak & Emily Gallagher & Michal Grinstein-Weiss & Stephen Roll, 2020. "Health Insurance as an Income Stabilizer," Working Papers 20-05, Federal Reserve Bank of Philadelphia.
    • Handle: RePEc:fip:fedpwp:87461
    DOI: 10.21799/frbp.wp.2020.05
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    More about this item

    Keywords

    regression discontinuity; Affordable Care Act; subsidies; labor supply; income;
    All these keywords.

    JEL classification:

    • D10 - Microeconomics - - Household Behavior - - - General
    • H51 - Public Economics - - National Government Expenditures and Related Policies - - - Government Expenditures and Health
    • I13 - Health, Education, and Welfare - - Health - - - Health Insurance, Public and Private
    • J22 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Time Allocation and Labor Supply
    • G51 - Financial Economics - - Household Finance - - - Household Savings, Borrowing, Debt, and Wealth
    • G52 - Financial Economics - - Household Finance - - - Insurance

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