Will Health Reform Lead to Job Loss?

Mass. experience gives no indication of negative economic and job consequences as a result of health reform.

In April 2006, Massachusetts enacted an ambitious health care reform bill that resulted in significant gains in insurance coverage, access to and use of care, and the affordability of care for the Massachusetts population as a whole and, especially, for lower-income adults. Given the success of health reform in Massachusetts along these dimensions, many of the key features of the Bay State’s initiative were incorporated in national health reform under the ACA, including an expansion of public coverage, subsidies for private coverage, a health insurance exchange, insurance market reforms, requirements for employers, and an individual mandate.

There are those who feel that when employers are required to offer health insurance coverage or make payments related to a worker, employers will reduce wages and/or other worker compensation over time to cover those new costs.

Key Findings

  • Declines in private-sector employment were consistent across the states—falling 4.4 percentage points in Massachusetts, compared to 4.8 percentage points, on average, in the rest of the nation.

  • The employment ratio in medium-sized firms with 50-499 employees fell by 1.9 percentage points, compared to 2.2 percentage points in the rest of the nation.

  • Even when accounting for firm size, industry, and job and worker characteristics, the trends in Massachusetts are similar to those in the nation as a whole.

The authors acknowledge that the recent recession, and the financial crisis that followed, have taken a toll on Massachusetts, as with the rest of the nation. They conclude, however, that there is no indication of negative economic and job consequences relative to other states as a result of health reform.

This brief was prepared by researchers at the Urban Institute as part of the Quick Strike Series.