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Who bears the burden of the U.S. health reform? An Event Study Incidence Analysis


  • Patricia Foo

    (Stanford University)

  • Wichsinee Wibulpolprasert

    () (Stanford University)


On March 23, 2010, President Obama signed the Patient Protection and Affordable Care Act (ACA) into law. The ACA includes a wide-reaching set of reforms to ensure more universal and comprehensive health insurance benefits. The bill has the potential to impact U.S. firms across all industries through regulations on employer-sponsored insurance (ESI), which resemble mandated benefits, and general equilibrium effects. We aim to identify how much shareholders across industries and firms will bear the burden of the ACA based on an event study of asset prices. We focus on two key legislative dates: (1) when the ACA was passed by the U.S. House of Representatives and (2) when the U.S. Supreme Court ruled on the constitutionality of the ACA. This unexpected change in asset prices captures the long-run expected impact of the reform for a given firm, including general equilibrium effects. Using a dataset of 321 publicly traded firms from 19 sectors (defined by the 2-digit North American Industry Classification System code), we find that 56% of firms experienced a negative impact on their asset prices when ACA was passed, and that the impact on asset prices was heterogeneous across firms. We find that this heterogeneity in asset price effects is consistent with partial equilibrium effects predicted by theory. In particular, shareholders of firms in sectors with a higher proportion of employees who are uninsured or who have ESI prior to the reform experience a negative impact on their asset prices from the ACA. In contrast, shareholders of firms in sectors with a higher proportion of employees who would qualify for the Medicaid expansion or who would qualify for premium subsidies on the health insurance exchanges experience a positive impact on their asset prices. Collectively, our results suggest that the incidence of the ACA lies partly on shareholders, but that the expansion of coverage through public insurance or publicly-supported insurance markets is incident on taxpayers

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  • Patricia Foo & Wichsinee Wibulpolprasert, 2013. "Who bears the burden of the U.S. health reform? An Event Study Incidence Analysis," Discussion Papers 12-035, Stanford Institute for Economic Policy Research.
  • Handle: RePEc:sip:dpaper:12-035

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    References listed on IDEAS

    1. Carrie H. Colla & William H. Dow & Arindrajit Dube, 2011. "The Labor Market Impact of Employer Health Benefit Mandates: Evidence from San Francisco's Health Care Security Ordinance," NBER Working Papers 17198, National Bureau of Economic Research, Inc.
    2. Mohamad Al-Ississ & Nolan H. Miller, 2010. "What Does Health Reform Mean for the Healthcare Industry? Evidence from the Massachusetts Special Senate Election," NBER Working Papers 16193, National Bureau of Economic Research, Inc.
    3. Poterba, James M. & Summers, Lawrence H., 1983. "Dividend taxes, corporate investment, and `Q'," Journal of Public Economics, Elsevier, vol. 22(2), pages 135-167, November.
    4. Cutler, David M, 1988. "Tax Reform and the Stock Market: An Asset Price Approach," American Economic Review, American Economic Association, vol. 78(5), pages 1107-1117, December.
    5. Jonathan Gruber, 2011. "The Impacts of the Affordable Care Act: How Reasonable Are the Projections?," NBER Working Papers 17168, National Bureau of Economic Research, Inc.
    6. Summers, Lawrence H, 1989. "Some Simple Economics of Mandated Benefits," American Economic Review, American Economic Association, vol. 79(2), pages 177-183, May.
    7. Lawrence H. Summers, 1981. "Taxation and Corporate Investment: A q-Theory Approach," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 12(1), pages 67-140.
    8. A. Craig MacKinlay, 1997. "Event Studies in Economics and Finance," Journal of Economic Literature, American Economic Association, vol. 35(1), pages 13-39, March.
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