The Effect of the Affordable Care Act on the Labor Supply, Savings, and Social Security of Older Americans

This paper assesses the effect of the Affordable Care Act (ACA) on the labor supply of Americans ages 51 and older. Using data from the Health and Retirement Study and the Medical Expenditure Panel Survey, we estimate a dynamic programming model of retirement that accounts for both saving and uncertain medical expenses. Importantly, we model the two key channels by which health insurance rates are predicted to change: the Medicaid expansion and the subsidized private exchanges. ∗French: University College London, eric.french.econ[at]gmail[dot]com, von Gaudecker: Universität Bonn, hmgaudecker[at]uni-bonn[dot]de, Jones: Federal Reserve Bank of Richmond, jbjones.albany[at] gmail[dot]com. We thank the Michigan Retirement Research Center for financial support and Naoki Aizawa, Paul Van de Water, Svetlana Pashchenko, Neale Mahoney, Karen Kopecky, and seminar participants at the annual Retirement Research Center meeting, Washington, DC, Bank of Korea Conference, Cowles Foundation Structural Microeconomics Conference at Yale, Barcelona GSE Summer Forum Workshop in Structural Microeconometrics, Society for Economic Dynamics, Stockholm School of Economics, Micro/macro conference in Oslo, Atlanta Fed Employment Conference, Sciences Po, Bristol, and the Briq Conference on Inequality at Bonn for helpful comments. The views expressed in this paper are those of the authors and not necessarily those of the Social Security Administration, the MRRC, the Federal Reserve Bank of Richmond or the Federal Reserve System.