February 7, 2017
Long-run labor market trends have not been favorable to many workers in the United States.
Changing technology and globalization have undermined the demand for the skills needed in traditional middle- and low-wage occupations, leading to stagnant wage growth and a gradual, but steady erosion of employer-sponsored health insurance.
The Affordable Care Act reversed the decline in coverage, increasing the number of people with insurance by more than 20 million. The bulk of this coverage was not tied to employment, although employer-sponsored plans remain the most importance source of coverage for non-elderly Americans.
Given the link between health insurance and the labor market, proposals to dismantle some provisions of Obamacare have important consequences for the labor market, said Thomas Buchmueller, professor of business economics and public policy.
Buchmueller and Robert Valletta, an economist with the Federal Reserve Bank of San Francisco, analyzed the changing landscapes for work, health and health insurance coverage for the February issue of Health Affairs.
"Whatever happens with the ACA, employer-sponsored insurance will likely remain a key source of health coverage in the United States," Buchmueller said. "But the same labor market forces that caused coverage to decline before the law went into effect are not going away."
Other long-run trends and recent developments are likely to increase the strain on the employer-sponsored system, he said. The aging of the workforce will raise health spending, while the rise of contract work and the "gig economy" will mean fewer and fewer workers employed full-time in wage and salary positions.
"The ACA strengthened the safety net and should mitigate some of the negative aspects of the labor market," Buchmueller said. "Legislative reversals may intensify the barriers many working-age people face as they seek affordable health care."