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Effects of Changes to the Health Insurance System on Labor Markets
Janet Holtzblatt (au); Benjamin Page (au)
In the U.S., health insurance coverage is linked to employment in ways that can affect both wages and the demand for certain types of workers. That close linkage can also affect people’s decisions to enter the labor force, to work fewer or more hours, to retire, and even to work in one particular job or another. Changes to the health insurance system could affect labor markets by changing the cost of insurance offered throughthe workplace and by providing new options for obtaining coverage outside the workplace. For ex., requiring employers to offer health insurance — or pay a fee if they do not — is likely to reduce employment, although the effect would probably be small. Providing new subsidies for health insurance that decline in value as a person’s income rises could discourage some people from working more hours.Increasing the availability of health insurance that is not related to employment could lead more people to retire before age 65 or choose not to work at younger ages. But it might also encourage other workers to take jobs that better match their skills, because they would not have to stay in less desirable jobs solely to maintain their health insurance.However, this economic brief shows that the overall impact on labor markets is difficult to predict. Although economic theory and experience provide some guidance as to the effect of specific provisions, large-scale changes to the health insurance system could have more extensive repercussions than have previously been observed and also may involve numerous factors that would interact — affecting labor markets in significant but potentially offsetting ways.
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