Date of Award

May 2014

Degree Type

Dissertation

Degree Name

Doctor of Philosophy (PhD)

Department

Economics

Advisor(s)

Jeffrey D. Kubik

Keywords

Elasticity, Health insurance job search, Health reform, Social Security Disability Insurance, Subsidy, Unemployment duration

Subject Categories

Social and Behavioral Sciences

Abstract

Chapter 1

While there has been a tremendous amount of literature on how Unemployment Insurance (UI) affects unemployed workers' job search behavior, there has been no previous study on how the health insurance premium subsidy affects this behavior. To fill the gap in previous studies, this paper analyzes the impact of the substantial federal health insurance premium subsidy on unemployment duration, using data from the Survey of Income and Program Participation (SIPP). To begin this study, I detail the history of the Consolidated Omnibus Budget Reconciliation Act (COBRA) of 1985 that was established to help keep unemployed workers insured. Furthermore, in order to help unemployed individuals reduce the cost of getting insurance, the American Recovery and Reinvestment Act (ARRA) of 2009 provided a 65% health insurance premium subsidy for workers who lost their jobs involuntarily and elected to take up COBRA coverage. The extended unemployment duration resulting from this premium subsidy is equivalent to the effect of increasing Unemployment Insurance benefits by 56 percent which is equal to $168 per week. In order to identify the subsidy effect on the duration of unemployment, this paper compares the unemployment duration of two different unemployed cohorts who lost their jobs just before and after the end of subsidy eligibility. This study sheds light on the unemployed workers' job search behaviors during the Great Recession and finds that the COBRA premium subsidy causes unemployed workers to significantly increase their unemployment duration by 2.11 months. The empirical results are consistent with the predictions of job search theory. Therefore, these estimates imply that the COBRA premium subsidy is having an important impact on the unemployed workers' job transition behavior.

Chapter 2

This paper analyzes the impact of the Employer Sponsored Insurance (ESI) expansion, part of the 2006 Massachusetts health reform, on Social Security Disability Insurance (SSDI) participation decisions. I exploit the variation across SSDI beneficiaries among married couples to identify the causal effect of the reform. I find that for spouses without ESI, the positive effect of the ESI expansion on SSDI participation is 0.98 percentage points stronger than it is for spouses with ESI. These estimates imply that spouses without ESI increases SSDI beneficiaries by 0.0429% (i.e., the 10.73% of total SSDI beneficiaries increase in Massachusetts after the reform) and is associated with higher SSDI beneficiaries. Moreover, my estimates imply an elasticity of spouses without ESI with respect to SSDI beneficiaries of 0.0913. The calculations suggest that the health reform was more expensive than it might first appear because of an increase in SSDI expenditure.

Chapter 3

This paper analyzes the impact of the Medicaid expansion, part of the 2006 Massachusetts health reform, on Supplemental Security Income (SSI) participation decisions. I exploit the variation across SSI-disabled applicants to identify the causal effect of the reform on the SSI claim rate. My estimates imply that the reform reduces SSI-disabled claims by 0.098% (i.e., the 11.66% of total claims in 2008 in Massachusetts) and is associated with a lower initial SSI claim. These estimates also imply Medicaid-disabled expenditure can save around 1% by attending to small inefficiencies in the current program. However, the calculations suggest that the health reform was not as expensive as it might first appear because of reductions in SSI expenditure.

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