Dependent coverage mandate reduces workers’ wages

The dependent coverage mandate in the Patient Protection and Affordable Care Act (ACA) (P.L. 111-148) is one of the most popular provisions of the law. However, recent research from the National Bureau of Economic Research (NBER) has found that workers at firms with employer-sponsored coverage—whether or not they have dependent children—experience an annual reduction in wages of approximately $1,200.

Dependent coverage mandate. Section 1001 of the ACA adds section 2714 to the Public Health Service Act, which allows children to stay on their parents’ health insurance plans through age 26. Under the ACA, dependent children must be allowed to remain on their parents’ plan regardless of whether or not the dependent is a full-time student, disabled, or married.

Study findings. The NBER report, The Incidence of Mandated Health Insurance: Evidence from the Affordable Care Act Dependent Care Mandate, used data from the Survey of Income Program Participation. The study noted that the marginal costs of mandated employer-based coverage expansions are not entirely born only by the people whose coverage is expanded by the mandate.

The researchers found that the actual impact on worker wages is large, dependent on the size of the employer and how many dependent children who did not previously have coverage enrolled in coverage through the employer. The impact on wages could range from less than $50 per year to more than $1,500 per year.

NBER did find evidence that: “Employees who were most affected by the mandate, namely employees at large firms, saw wage reductions of approximately $1,200 per year. These reductions appear to be concentrated among workers whose employers offer employer-sponsored health insurance; however, they do not seem to be only borne by parents of eligible children or parents more generally.”

SOURCE: http://www.nber.org/papers/w21846.pdf

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