Filed Under:Markets, Employee Benefits

Estimate: Nearly 1M workers to quit when exchanges open

The end of working for the perk?

Some Obamacare opponents have labeled the Patient Protection and Affordable Care Act as a job-killer. New research indicates there may be a grain of truth to that — although the jobs won’t be “lost” the way the naysayers are predicting.

Rather, workers who are today in the workforce primarily as a means of obtaining affordable health care coverage will likely quit working, either temporarily or permanently.

That’s the prediction of research by a triumvirate of academicians, in a study spearheaded by the University of Chicago’s Booth School of Business, with contributions from others at Columbia University and Northwestern.

They based their projection — that upwards of 900,000 current jobholders might quit — on extrapolations from a Tennessee “test case.”

In the Volunteer State, a health plan was created in 1994 for those whose income put them above the Medicaid line but below the wage levels that would have allowed them to comfortably afford coverage on the open market.

Confronting a budget crunch, Tennessee discontinued the program in 2005 and 170,000 people lost coverage. Almost immediately, these people — mostly single adults without kids — started looking hard for jobs. About half of them were able to find employment where they received health care as a benefit.

“This shows that there are many people out there who look for work simply because they need health insurance. For them, the perk matters more than the paycheck,” said Tal Gross, co-author of the paper and assistant professor of Health Policy and Management at the Mailman School at Columbia.

The conclusion the authors draw is that the same thing will happen when the insurance exchanges go live. People who are working primarily for the health coverage will quit working, get coverage through an exchange, and do whatever it is they really want to do instead of report to work on a regular basis.

Their conclusion, the researchers said, underscored one of the big flaws in the insurance industry.

“The fact that people are working solely to get health insurance signals a failure of the private health insurance market (to make coverage affordable),” said Matthew J. Notowidigdo, Neubauer Family Assistant Professor of Economics at the Booth School and a study co-author. “That’s one of the reasons why the Affordable Care Act was created.”

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Originally published on BenefitsPro. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.

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