The study by professors from Columbia University, Northwestern University and the University of Chicago has found that the Affordable Care Act may cause a significant number of people to quit the jobs they use to get employer-sponsored health insurance in favor of federal subsidies and welfare.
A large Medicaid expansion, state-based individual insurance exchanges and federal subsidies will “weaken the link between employment and health insurance,” an effect the authors lauded in a press release from Columbia University’s Mailman School of Public Health.
But the availability of taxpayer-funded insurance will likely lead to lower-income consumers opting out of work and into welfare and Obamacare exchanges, the study concludes. Researchers studied a case when Tennessee discontinued an expansion of its Medicaid system and 170,000 lost publicly-funded health insurance from the program — and went back to work.
Under the ACA, the study projects that between 530,000 and 940,000 individuals would simply stop working to receive employer-based insurance in order to receive federally-funded health insurance.
Not only would the number of working individuals drop, but the cost of the ACA may be much higher than expected, according to the study. Researchers found that if all states participated in Obamacare’s Medicaid expansion, as many as 4.2 million individuals would move from purchasing their own private health insurance to taking the publicly-funded version — a figure well above the Congressional Budget Office’s estimates.
An increase in Medicaid enrollment could be up to 16 percent according to the study, instead of the 10 percent suggested by the CBO. With the federal government on the hook for 100 percent of the cost of Medicaid expansions for the first three years, a larger pool than expected may increase costs significantly.
After the administration announced earlier this month that the employer mandate would not be enforced until 2015, Republicans requested a new cost estimate from the CBO, which had projected that the employer mandate would bring in $10 billion in federal revenues in 2014.
Not all states have accepted the Medicaid expansion: to date 14 states have refused the program’s enlargement. It is possible that these states may see a lower drop in employment than states with the expansion.
But even these states won’t be immune to adverse employment effects. The study notes, subsidies for state exchanges could have the same damper effect on the economy.
The authors of the paper were quick to stress that their results do not indicate that Obamacare is a “job killer,” according to a Columbia University press release.
“The fact that people are working solely to get health insurance signals a failure of the private health insurance market,” said Dr. Matthew Notowidigdo, a co-author of the paper and an assistant professor at the University of Chicago.
A second co-author, Dr. Craig Garthwaite, argued that the break between employment and health insurance enshrined in Obamacare is “giving people important options that otherwise wouldn’t exist without the ACA.”
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