Research: Does Health Care Reform Affect Labor Participation by Older Workers?

In a blog posting on MarketWatch, Alicia H. Munnell follows up on research published by Center for Retirement Research at Boston College on the effects of Massachusetts’ health-insurance reform. According to Munnell, analysis "yielded an interesting result. It showed that, compared to nearby states, 55-to-64-year-old males in Massachusetts experienced the largest decline in labor force participation between the time before and after the health insurance reform." Specifically, the state Massachusetts saw a decline in labor force participation for that group of 1.3 percentage points while the rest of the nation saw an increase of 1.7 percentage points.

One possibility for the difference could be the ability of those men to acquire affordable health insurance without having to wait for Medicare. In support of this theory, Munnell notes that "prior to Massachusetts’ health reform, 93% of 55-to-64-year-old males who were out of the labor force had health insurance; after the reform that number had risen to 97%."

Munnell then contemplated extrapolating these results across the country, in light of the Affordable Care Act. She said that, "[i]f unhealthy workers—or people who simply hate their jobs—were able to leave the labor force because of expanded access to health insurance, economists argue that this reduction may not be a bad thing." However, "if health reform alters the financial incentives to work through higher marginal income taxes on labor, as some have argued will be the case under the ACA, then a reduction in labor force participation may be a negative outcome of health reform."

Source: MarketWatch "Will health reform affect older workers?" (June 11, 2014)