How Did Affordable Care Act Exchanges Affect Individuals' Willingness to Quit Their Jobs?

Background: In October 2013, the Affordable Care Act (ACA) health insurance exchanges began offering access to subsidized community-rated plans previously unavailable to many non-elderly adults. This shock represents a decrease in the opportunity cost to employment for those with employer-sponsored insurance (ESI). Studies have examined labor participation, but not willingness to voluntarily quit as a result of expanded availability of guaranteed issue coverage. There is similarly little evidence on the reasons people quit or the activities that individuals pursue after quitting.

Objective: To test the effect of the launch of ACA health insurance exchanges (late 2013) on individuals’ willingness to quit their current main job.

Methods: Repeated panels (2006-2015) from the Medical Expenditure Panel Survey (MEPS) contain information on current employment and quitting in five survey rounds over a two-year period. Linear probability models (LPM) with standard errors clustered at the household level predict the probability of quitting, controlling for temporal and seasonal trends using panel/round fixed effects. Models include controls for demographic and socioeconomic characteristics and are weighted using the provided longitudinal weights. The main effect compares the first open enrollment period (Q4 2013-Q1-2014 [panel 17, round 5]) with the same seasonal period (round 5) in different panels (first difference), then controls for time trends by subtracting out the same comparison from a different round (e.g., panel 17, round 2) (second difference).

Results: The sample contains 105,348 individuals, 2,782 of whom quit their current main job over 10 overlapping panels (10 years) of 4 rounds each (round 1 established current job). The unadjusted rate of voluntary quitting in round 5 across all pre-exchange panels was 3.1%. During the first open enrollment (panel 17, round 5), the predicted probability of voluntary quitting was nearly a full percentage point higher than the average of the prior panels [0.93 percentage points (95% CI: 0.01, 1.80)] and consistent for individual years (first difference). Controlling for temporal changes (second difference), using the second and third rounds as referent, the average effects are even stronger [2.01 (0.93, 3.11)] and [1.54 (0.37, 2.70)], respectively. We also observe a stronger effect in earlier panel years (pre-2010), suggesting the period of and following the Great Recession may have dampened willingness to quit. The largest change in reasons for voluntarily quitting a position between the first open enrollment and pre-exchange periods was ‘quit to take care of home/family’ (10.6%) followed by ‘quit to go to school’ (7.58%).

Conclusions: These results show support for the job lock hypothesis, indicating that individuals may be willing to quit their jobs when access to other sources of affordable health insurance become available. The magnitude of this result is small, but generalizable to a sizable population, unlike other previous attempts to characterize the effects of the ACA on labor outcomes. Specifically, we describe the pathway where individuals may be willing to quit their current job differentially around the time of the first ACA open enrollment period. Affordable access to health insurance can improve flexibility to move in and out of the labor force.