The biggest worry about Obamacare never materialised

Obamacare protestAlex Wong/Getty ImagesObamacare opponents with masks of President Barack Obama and the Grim Reaper in front of the US Supreme Court in 2012.

Around the time of the passing of the Affordable Care Act, known as Obamacare, many opponents of the law argued that it would change the way Americans worked for the worse.

A new study suggests, however, that this doom-and-gloom scenario has not come to pass.

Robert Kaestner, Anuj Gangopadhyaya, and Caitlyn Fleming from the University of Illinois and Bowen Garrett of the Health Policy Center examined the effects on the labour market of a Medicaid expansion that was introduced as part of the ACA.

According to the study, there was fear that to qualify for Medicaid, workers may decrease work effort by cutting back hours. By reducing hours, such workers would receive wages low enough to qualify for Medicaid.

That change, the researchers said, has not materialised.

“Estimates of the effect of Medicaid on labour supply were, in general, relatively small and not statistically significant,” the study said. “In fact, most estimates of the effect of the Medicaid expansions on labour supply were positive. Overall, there was very little evidence that the Medicaid expansions decreased work effort.”

The researchers analysed data from 22 states that expanded or initiated Medicaid coverage at the beginning of 2014. Additionally, they zeroed in on people with a high-school diploma or less, as they are most likely to earn around the Medicaid cutoff line.

The researchers looked at changes for three indicators: employment, number of hours worked versus the previous year, and whether the person worked 30 hours or more a week.

“To summarize, we find that the 2014 Medicaid expansions did not have substantial effects on the labour supply of low-educated persons in the US,” the study said.

For instance, the researchers found that in childless adults the combined change in the three indicators that could be attributed to the Medicaid expansion was just -0.003% to 0.003%. Most of the other samples were similarly tiny.

“The bottom line is that we can rule out large negative effects of Medicaid on labour supply such as those in Garthwaite et al. and in the upper range of estimates from the Wisconsin study,” the researchers said. “Moreover, most of our point estimates are positive suggesting that, if anything, Medicaid increased labour supply.”

While there are certainly other concerns about the impact of the ACA on workers, the study suggests the idea that the law will “keep many beneficiaries in poverty” is simply not panning out.

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