There Is No Evidence That Obamacare Will Make Poor Americans Less Likely to Work

After Oregon lotteried Medicaid spots, the newly insured and the still uninsured worked about the same.


Will we stop working once we don't need to work to get health insurance?

Well, no. At least not most of us. Most of us will still have things like food, shelter, and retirement, among other assorted hierarchy of needs, to pay and save for. But some of us will already have these other needs mostly taken care of — and would probably take time off or retire early if we could get affordable health insurance without a job. Here's how Ezra Klein described what Obamacare might mean for people like this back in 2011:

[I]magine a 50-year-old single mother who wants to home-school her developmentally disabled child but can't quit her job because they'll lose health care. The subsidies and the protections in the Affordable Care Act will give her the option to stop working for awhile, while under the old system she'd need to stick with her job to keep her family's health-care coverage

But just how big will this trade-off between insurance and work be? It's hard to say for people who already have insurance, but we have a better idea for people who don't -- and it's not very big. At least that's what a new study by Katherine Baicker of Harvard, Amy Finkelstein of MIT, Jae Song of the Social Security Administration, and Sarah Taubman of NBER concludes after looking at employment data for insured and uninsured Oregonians the past few years.

Back in 2008, Oregon expanded its Medicaid program, but didn't have enough money to expand it for everyone who wanted it. So they held a lottery. Now, this sounds like some kind of Hunger Games-style dystopia (because it is), but it's also been a boon for science. That's because who did and didn't get health insurance was completely random — which lets researchers test how much insurance matters. And when it comes to jobs, the answer is not much.

The study looked at payroll tax data for 85 percent of the people who entered Oregon's Medicaid lottery to see if getting or not getting insurance changed how much they subsequently earned. It didn't, really. Winning Medicaid coverage had no statistically significant impact on either labor force participation or wages. Though that doesn't mean there were no impacts. Labor force participation and average annual earnings did fall 1.6 percentage points and $195, respectively, but these were both statistically insignificant differences.

Universal healthcare is not going to turn us into a nation of takers. People will still work. Some people might work less, but not that much less. Other people might work the same, but in more productive jobs. Maybe they'll switch jobs more now that they don't have to worry about losing their insurance. Or maybe they'll be more likely to start a company. In any case, this study tells us that expanding Medicaid, like Obamacare will, won't turn our safety net into a hammock.

We don't need the threat of medical bankruptcy to make our economy work.