Effects of the Affordable Care Act on Healthcare Providers

One of the main purposes of recent healthcare reform (Patient Protection and Affordable Care Act - ACA) is to lower the number of uninsured individuals by expanding public and private insurance coverage.  According to information from the Census data, over 20 million individuals became newly insured, causing the uninsured rate to decrease from 15.7%, just prior to the signing of the ACA in 2010, to 9.2% in the first quarter of 2015.  While a number of studies have examined how these expansions have affected patients, assessing effects on their insurance status, health outcomes and behaviors, and employment outcomes, very few studies have examined effects on providers.  None that we are aware of has directly examined how expanded insurance coverage under the ACA has impacted the labor supply of physicians and related healthcare providers.  We provide the first evidence on this question based on information from the Current Population Surveys and the American Community Surveys.  We exploit plausibly exogenous variation in insurance coverage pre- and post-ACA, across states expanding their Medicaid programs versus states that have not expanded Medicaid under the ACA to estimate difference-in-difference (DD) models for labor market outcomes of physicians, nurses, and other healthcare providers. We also estimate triple-differenced (DDD) models, comparing labor market outcomes for healthcare occupations to those for similar professional occupations, the demand for whose services should not have been impacted by the ACA.  Preliminary estimates suggest that the expansions in insurance coverage due to the ACA led to a significant increase in the earnings and labor supply of health care providers whose services experienced a positive demand shock. Supplementary models assess heterogeneity in these effects across various margins, and implemented various robustness checks to assess and adjust for differential trends in labor supply prior to the ACA.  We draw implications from these results for the estimated short-run labor supply elasticity of healthcare providers, and draw further implications with respect to healthcare costs and quality.