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Self-employment and health care reform: evidence from Massachusetts

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  • Thealexa Becker
  • Didem Tuzemen

Abstract

We study the e ect of the Massachusetts health care reform on the uninsured rate and the self-employment rate in the state. The reform required all individuals to obtain health insurance, required most employers to o er health insurance to their employees, formed a private marketplace that o ered subsidized health insurance options and ex- panded public insurance. We examine data from the Current Population Survey (CPS)for 1994-2012 and its Annual Social and Economic (ASEC) Supplement for 1996-2013. We show that the reform led to a dramatic reduction in the state's uninsured rate due to increased enrollment in both public and private health insurance. Estimation results from di erence-in-di erences models and the synthetic control method indicate that the aggregate self-employment rate was higher in the state after the implementation of the reform. We conclude that easier access to health insurance encouraged self-employment in Massachusetts. There are many similarities between the Massachusetts health care reform and the national health care reform, the Patient Protection and Affordable Care Act (PPACA). Based on Massachusetts' experience, the PPACA will lower the national uninsured rate and may lead to a higher self-employment rate in the nation.

Suggested Citation

  • Thealexa Becker & Didem Tuzemen, 2014. "Self-employment and health care reform: evidence from Massachusetts," Research Working Paper RWP 14-16, Federal Reserve Bank of Kansas City.
    • Handle: RePEc:fip:fedkrw:rwp14-16
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    File URL: https://www.kansascityfed.org/documents/7724/rwp14-16.pdf
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    References listed on IDEAS

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    Cited by:

    1. Li, Yajuan & Palma, Marco A. & Towne, Samuel, 2017. "Does Health Insurance Provision Improve Self-Employment and Entrepreneurship? Evidence from State Insurance Mandates," 2017 Annual Meeting, July 30-August 1, Chicago, Illinois 258399, Agricultural and Applied Economics Association.
    2. Nga Le Thi Quynh & Groot, Wim & Tomini, Sonila M. & Tomini, Florian, 2017. "Effects of health insurance on labour supply: A systematic review," MERIT Working Papers 2017-017, United Nations University - Maastricht Economic and Social Research Institute on Innovation and Technology (MERIT).

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    More about this item

    Keywords

    Massachusetts health care reform; Patient Protection and Affordable Care Act; self-employment; health insurance; difference-in-differences model; synthetic control method;
    All these keywords.

    JEL classification:

    • C10 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - General
    • C15 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Statistical Simulation Methods: General
    • E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity
    • I13 - Health, Education, and Welfare - - Health - - - Health Insurance, Public and Private
    • I18 - Health, Education, and Welfare - - Health - - - Government Policy; Regulation; Public Health
    • I38 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - Government Programs; Provision and Effects of Welfare Programs
    • L26 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Entrepreneurship

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