Obamacare and long-term U.S. economic competitiveness

The legal arguments before the U.S. Supreme Court this week in King vs. Burwell may well decide whether a key provision of the Affordable Care Act remains in effect for millions of Americans who now rely on Obamacare for affordable health insurance. But if this elite jury of nine judges is still out on the legal question before the court, the long-term economic consequences of uninsuring the many children now insured under the new health law are clear.

Several new research papers document the importance of early childhood health care for the least advantaged kids among us—on their future workforce productivity, their contributions to our national tax base, their educational attainment, and their declining use of government income supports. These robust findings mirror the results of research that I conducted with economists Sandra Decker of the National Center for Health Statistics and Wanchuan Lin of Peking University. We found that Medicaid coverage for children born between 1985 and 2005 resulted in a better health trajectory for those kids as they because adolescents and young adults, and thus improved their ability to be productive contributors to our economy.

What will happen if less-well-off kids today do not get the affordable health care they need to become successful contributors to our economy over the coming decades? Well, the best economic research shows that current government health care programs, including those recently expanded under Obamacare, already ensure many of these kids will be better and more productive citizens. So lets parse the data.

The first paper, by economists David Brown and Ithai Lurie of the U.S. Treasury Department, and economics professor Amanda Kowalski of Yale University finds that children who gained public health insurance in the 1980s and 1990s under the expanded Medicaid and the Children’s Health Insurance Program paid more in cumulative taxes by age 28, collected less in payments from the Earned Income Tax Credit, and (among the women in the group) attained higher cumulative wages. The three authors estimate that when these now young adults reach the age of 60 the federal government will have recouped at least 56 cents for each dollar spent on childhood health care.

The second paper, by economists Laura Wherry at the University of California-Los Angeles, Sarah Miller at the University of Michigan, Rober Kaestner at the University of Illinois, and Bruce Meyer at the University of Chicago, shows that providing public health insurance to low-income children results in fewer hospitalizations and emergency room visits in adolescence and adulthood. Their findings strongly suggest that substantial health care savings are in the cards for this group of Americans—a welcome boon as the U.S. economy struggles with reducing the cost of health care in our society.

The third paper, by economists Sarah Cohodes of Harvard University and Cornell University’s Samuel Kleiner, Michael Lovenheim, and Daniel Grossman, shows that better public health care among low-income children in the 1980s and 1990s resulted in higher graduation rates from high school and college for these kids, again indicating that the long-run economic benefits of public health insurance are substantial.

None of these studies examined the health of kids enrolled in public health programs due to Obamacare specifically—the program is too new for these kinds of long-term studies—but the further expansion of eligibility for low-income children through Medicaid and the Children’s Health Care Program is one of the things at stake in the Supreme Court’s oral arguments in King vs Burwell next week and the final decision sometime this summer.

What could happen should the Supreme Court decide in effect to shut down the federal health insurance exchange operating in 34 states without their own exchanges? Among the results could be more than 5 million enrollees in the joint state-federal Children’s Health Insurance Program without health insurance, estimates the Children’s Health Fund, a provider of mobile health care for homeless and low-income children. We already know the empirical long-term economic benefits of expanded health care for those least able to afford it—and can say with strong confidence that taking away health insurance for these five million now covered under Obamacare would harm our economy.

—Janet Currie is the Henry Putnam Professor of Economics and Public Affairs at Princeton University and directs the Program on Families and Children at the National Bureau of Economic Research. Her views expressed in this column are her own.

March 2, 2015


Economic Wellbeing


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