ACA had 'no adverse impact' on workers' hours and wages: report

disengaged worker
Critics predicted the ACA's employer mandate would reduce workers' hours and cause a decline in employer-sponsored insurance. But that hasn't materialized. (TwilightShow/iStock)

The Affordable Care Act passed in 2010 amid apocalyptic warnings about the impact the law would have on workers' hours and wages.

A new report shows those fears never materialized. In the six years following the ACA's passage, employment rates and employer-sponsored insurance both rose alongside coverage expansion.

By 2016, coverage had grown 9.6% over 2010 levels and employment increased 8.2%, according to an Urban Institute report prepared for the Robert Wood Johnson Foundation. Crucially, employer-sponsored insurance (ESI) coverage also rose 6.8% for low-income workers (those earning less than $15 an hour)—the exact opposite of critics' predictions.

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"In contrast to some well-publicized and controversial predictions, the coverage gain for an estimated 11.0 million workers between 2010 and 2016 did not produce unintended consequences in the form of reduced employment, reduced earnings, or reduced number of hours worked," the Urban Institute wrote. "We find little to no association between an occupation’s change in health insurance coverage and these labor market factors."

To the extent they were articulated, concerns about the ACA's potential impact on workers took the form of two broad arguments:

  1. With the addition of new types of coverage through the Medicaid expansion and the ACA marketplaces, employers would be tempted to save money by decreasing ESI, as they knew their workers would have other options.
  2. Once the employer mandate took effect in 2015, workplaces that had more than 50 full-time workers were obligated to provide ESI. Critics anticipated workplaces would try to avoid that threshold either by laying off workers or reducing the hours of workers so they didn't have as many full-timers.

However, neither of these predictions came to fruition in the years following the ACA's passage, the Urban Institute said, and the report found "no evidence of a corresponding 'crowd-out' effect on ESI coverage."

"In fact, we find that occupations experiencing larger increases in non-ESI coverage also experienced increased ESI coverage," the report stated.

The fact is, employees who lacked coverage before the ACA were already in occupations that didn't offer ESI, according to the Urban Institute. Coverage gains were obviously largest among this group of workers, but they weren't uniform in type. Many of those workers gained coverage through the marketplaces or through Medicaid, but many also obtained ESI for the first time.

Further, The Urban Institute found no association between these coverage gains and changes in the number of workers between 2010 and 2016. Employment went up over the examined period, and workers averaged an additional 0.1 hours of work per week—a fairly modest increase, but definitely not a decline.

RELATED: Part-time workers saw substantial coverage gains from the ACA

The one big caveat looming over this analysis is that during the examined period, 2010-16, the economy recovered significantly following the Great Recession of 2007. The authors conceded they were unable to isolate the effect of the ACA from the recovery at large, making it hard to know exactly what was causing the increase in employment.

"The recovery may have affected occupation groups in ways we do not fully control, which could affect our interpretation of the findings. For example, even though we find no reduction in hours worked among occupations with the largest coverage gains, it is possible their hours would have increased by a larger amount due to the economic recovery absent the ACA," the report said.

Still, the fact that employment did not go down following the ACA gave the researchers confidence that, at minimum, the adverse labor consequences critics predicted were not significant, and there's certainly no sign of the dire warnings in the data. 

"Instead, we find broadly improving labor market outcomes under the ACA, substantial gains in health insurance coverage, and no adverse consequences for workers in occupations with the largest coverage gains," the researchers concluded.

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