A Changing Labor Market Landscape: Implications for Health Insurance and Health Policy

The implications of the ACA’s coverage expansions for access to medical care have received considerable attention from researchers. Studies have also highlighted the important impact of insurance coverage on financial outcomes for patients and providers. Somewhat less attention has been paid to the labor market implications of the ACA and, in particular, what the new coverage options mean for workers in middle and lower-wage occupations who have been most adversely affected by fundamental economic changes such as globalization, the diffusion of labor-saving technologies and the rise of the “gig economy.” In a recent article published in Health Affairs, Robert Valletta and I discussed some of these changes and their implications for health and health insurance coverage.

The article was part of a special issue on the work/health relationship. As we note in the article, this relationship is complex. Some research suggests that working long hours undermines health, particularly when workers are required to work more hours than they desire. At the same time, a lack of work can also have negative consequences for health, especially mental health. Unemployment has been linked to substance abuse and increased mortality. Poor labor market prospects for less educated workers, particularly men, are seen as a contributing factor to the dramatic rise in prescription opioid misuse and the increase in mortality among middle-aged white men. The rise of participation in disability programs has also been linked to declining labor market opportunities for blue collar workers.

These labor market and health concerns loom large in the current U.S. political environment. Populist sentiment has focused on the shrinking base of “good jobs” that pay high wages and offer favorable benefits. The potential for trade, immigration, and tax policies to reverse or offset these developments remains unclear but is likely to be a source of controversy and debate for years to come.

One of the most important features of the ACA is that it strengthened the safety net for workers who do not work in the type of well-paying full-time jobs that provide comprehensive health benefits.

In the meantime, although health policy cannot reverse the major trends in the labor market, it can provide important relief for workers who have been most adversely impacted. Indeed, one of the most important features of the ACA is that it strengthened the safety net for workers who do not work in the type of well-paying full-time jobs that provide comprehensive health benefits. The ACA does not reduce the number of workers who are employed part-time, working through a temp agency, freelancing or driving for Uber. But, it does provide such workers with an affordable source of health insurance coverage. As is well known, roughly 20 million Americans gained health insurance coverage as a result of the ACA. Because most of the new coverage is not tied to a specific job provides workers with greater flexibility.

A strengthened safety net allows workers to take more risk and to deal more effectively with risks that have been thrust upon them. And because the bulk of the new subsidies provided by the ACA go to lower-income households (in contrast to the tax subsidy of employer-sponsored health insurance, which is tilted strongly to those with higher incomes), the ACA has the effect of reducing income inequality .

The future of the ACA is quite uncertain. Much attention has been paid to the potential impact that repealing the law would have on patients, health care providers, and insurance markets, and rightly so. But given the historic link between health insurance and the workplace in the U.S., it is important to recognize that policies affecting insurance coverage have important spillovers to the labor market. According to projections by the CBO, the House Republican proposal would shred the health insurance safety net that the ACA established. The loss of health insurance coverage would deal yet another blow to workers who have been hardest hit by recent economic events.

Feature image: vonderauvisuals, Construction, A construction worker heads to the construction site – The Loop – Chicago, IL, used under CC BY-NC-ND 2.0/cropped from original