Open AccessLabor market sorting and health insurance system design
Author(s) -
Aizawa Naoki
Publication year - 2019
Publication title -
quantitative economics
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 4.062
H-Index - 27
eISSN - 1759-7331
pISSN - 1759-7323
DOI - 10.3982/qe1145
Subject(s) - sorting , group insurance , sort , actuarial science , health insurance , risk pool , business , insurance policy , casualty insurance , key person insurance , general insurance , auto insurance risk selection , self insurance , labour economics , health care , income protection insurance , economics , economic growth , computer science , information retrieval , programming language
This paper develops and estimates a life‐cycle equilibrium labor search model in which heterogeneous firms determine health insurance provisions and heterogeneous workers sort themselves into jobs with different compensation packages over the life cycle. I study the optimal joint design of major policies in the Affordable Care Act (ACA) and the implications of targeting these policies to certain individuals. Compared with the health insurance system under the ACA, the optimal structure lowers the tax benefit of employer‐sponsored health insurance and makes individual insurance more attractive to younger workers. Through changes in firms' insurance provisions, a greater number of younger workers sort into individual markets, which contributes to improving the risk pool in individual insurance and lowering the uninsured risk.