The Impact of Massachusetts Health Reform on Labor Mobility Norma B. Coe University of Washington Alicia H. Munnell, Wenliang Hou, Matthew S. Rutledge Center for Retirement Research at Boston College Patrick J. Purcell U.S. Social Security Administration 19th Annual Meeting of the Retirement Research Consortium Washington, DC August 3, 2017

“Job lock” may hold back labor mobility. Job lock: staying in a job because of its health insurance. Job lock results in inefficient labor allocation. Too few job changes. Too little employment in small firms or self-employment. Too many workers staying at large firms. Later employment exit than the worker would prefer. Some evidence of job lock in empirical literature. But COBRA and HIPAA may have reduced its effects.

Does health insurance expansion ease job lock? Affordable Care Act (ACA) might not be the right experiment. Nationwide roll-out Implementation problems Uncertainty about its permanence Instead, we look at Massachusetts. Control states available Relatively effective implementation More certainty about its permanence

Did Massachusetts reform ease job lock? Compared to workers in similar states, did MA workers: Increase job switching; Increase large-to-small firm employment transitions; Decrease small-to-large firm employment transitions; and Increase employment exits? Examine labor market transitions separately at prime (30-54) and older (55-64) ages.

Administrative data help to detect effect of reform on (fairly uncommon) job transitions. Continuous Work History Sample (CWHS) 1-percent sample of longitudinal earnings records Some demographics: age, gender, race Linked to Longitudinal Employee-Employer Data (LEED) State of residence Employer identifier and location (headquarters)

The analysis compares MA workers to workers in nearby states without reform. Sample: 180,000 unique workers at ages 30-64 Treatment: Live and/or work in MA Control: Live and/or work in NY, rest of New England (except VT) The data allow us to examine individual and employer mandates separately. Both mandates: live and work in MA Individual mandate only: live in MA, work outside MA Employer mandate only: work in MA, live outside MA

Strategy: did change in MA transitions differ from transitions in control states? Outcomes of interest: Switching employers Switching from large to small firm Switching from small to large firm Exit employment Difference-in-differences regressions Indicator for MA (vs. control states) Some models: MA residence vs. MA employment Indicator for 2007 or later (post-reform) Interaction of MA and post-reform

Employer-to-Employer Transitions at Ages 30-54, 2001-2011 Job-to-job changes were falling in all states, and that fall continued in MA after reform. Employer-to-Employer Transitions at Ages 30-54, 2001-2011 Source: Continuous Work History Sample-Longitudinal Employee-Employer Data merged file, 2000-2011.

Large Employer-to-Small Employer Transitions at Ages 30-54, 2001-2011 MA workers were always more likely to move to small firms, including after reform. Large Employer-to-Small Employer Transitions at Ages 30-54, 2001-2011 Note: Small-to-large employer transition rates are conditional on making any employer change. Source: Continuous Work History Sample-Longitudinal Employee-Employer Data merged file, 2000-2011.

No clear trend away from large firm employment in MA after reform. Small Employer-to-Large Employer Transitions at Ages 30-54, 2001-2011 Note: Small-to-large employer transition rates are conditional on making any employer change. Source: Continuous Work History Sample-Longitudinal Employee-Employer Data merged file, 2000-2011.

Older MA workers grew even less likely to change jobs. Employer-to-Employer Transitions at Ages 55-64, 2001-2011 Source: Continuous Work History Sample-Longitudinal Employee-Employer Data merged file, 2000-2011.

Large Employer-to-Small Employer Transitions at Ages 55-64, 2001-2011 Older MA workers moved to small firms at same rate as rest of Northeast post-2007. Large Employer-to-Small Employer Transitions at Ages 55-64, 2001-2011 Note: Small-to-large employer transition rates are conditional on making any employer change. Source: Continuous Work History Sample-Longitudinal Employee-Employer Data merged file, 2000-2011.

Small Employer-to-Large Employer Transitions at Ages 55-64, 2001-2011 Older MA workers may have became more likely to move to large firms around reform. Small Employer-to-Large Employer Transitions at Ages 55-64, 2001-2011 Note: Small-to-large employer transition rates are conditional on making any employer change. Source: Continuous Work History Sample-Longitudinal Employee-Employer Data merged file, 2000-2011.

Rate of Exiting Employment at Ages 30-54, 2001-2011 Difference between MA and Northeast in exits was stable for prime-age workers… Rate of Exiting Employment at Ages 30-54, 2001-2011 Source: Continuous Work History Sample-Longitudinal Employee-Employer Data merged file, 2000-2011.

Rate of Exiting Employment at Ages 55-64, 2001-2011 ... while older MA workers became even less likely to exit employment after reform. Rate of Exiting Employment at Ages 55-64, 2001-2011 Source: Continuous Work History Sample-Longitudinal Employee-Employer Data merged file, 2000-2011.

All else equal, MA workers became less likely to change jobs, move to a small firm. Linear Probability Model Estimates for Labor Market Outcomes, Ages 30-54   Post-reform MA MA ×Post N and R2 Changing employers -0.013 *** 0.020 -0.006 849,447 Large to small 0.006 0.022 * -0.020 ** 51,677 Small to large 0.019 0.0135 0.0036 64,634 Exiting employment 0.0026 0.00031 0.00048 876,550 Notes: Small-to-large employer transitions are conditional on making any employer change. *** p<0.1, ** p<0.1, * p<0.1. Source: Continuous Work History Sample-Longitudinal Employee-Employer Data merged file, 2000-2011. 15

Older MA workers also became less likely to exit employment. Linear Probability Model Estimates for Labor Market Outcomes, Ages 55-64   Post-reform MA MA ×Post N and R2 Changing employers -0.010 *** 0.017 -0.007 190,814 Large to small -0.016 0.044 ** -0.052 7,433 Small to large 0.014 0.029 0.010 8,748 Exiting employment 0.0004 -0.0038 -0.0016 198,313 Note: Small-to-large employer transitions are conditional on making any employer change. *** p<0.1, ** p<0.1. Source: Continuous Work History Sample-Longitudinal Employee-Employer Data merged file, 2000-2011. 16

Bottom line: no real evidence that MA reform eased job lock. Estimates are in opposite direction from job lock, and often statistically significant. Similar results: By gender When dropping 2007, NY For different definitions of small firms Neither the individual-level nor the employer-level reforms seem to increase mobility.

Conclusion Massachusetts health reform was expected to reduce job lock, increasing job-to-job mobility and allowing for freer exits. Estimates suggest that, if anything, mobility fell by more in MA than in neighboring states. Reason for lack of job lock is unclear. Did job lock not restrict worker mobility prior to reform? Were new insurance plans unattractive, or too expensive? Clear evidence of job lock reduction with ACA will likely be even harder to find.