Health Insurance and Workers' Compensation Claiming: Evidence from the Affordable Care Act

Despite the fact that the U.S. workers’ compensation (WC) systems provides tens of billions of dollars in medical care each year, relatively little is known about how changes in health insurance availability affect the incidence and nature of WC claims, and the theoretical relationship is ambiguous. In this paper, we exploit the Affordable Care Act (ACA) young adult dependent coverage expansion to measure the effect of health coverage expansions on WC claim frequency and severity. Using millions of hospital records drawn from four large states with distinct WC systems and a difference-in-differences research design that contrasts WC claims across narrow age bands, we find that a 10 percentage point reduction in uninsurance in the target population was associated with a 6%-9% drop in WC bills, with this decrease driven by harder-to-verify conditions, such as strains and sprains, as well as more expensive WC claims. These results suggest that the ACA coverage expansions may serve to broadly, albeit modestly, lower costs in the WC system. ∗The research was funded with the generous support of the Casualty Actuarial Society (CAS) and the RAND Institute for Civil Justice. The content of the paper is solely the responsibility of the authors. The authors can be reached at Philip [email protected], Prodyumna [email protected], and [email protected].