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Spousal labor market effects from government health insurance: Evidence from a veterans affairs expansion. (Boyle & Lahey 2016)

Absence of conflict of interest.

Citation

Boyle, M. A. & Lahey, J. N. (2016). Spousal labor market effects from government health insurance: Evidence from a veterans affairs expansion. Journal of Health Economics, Elsevier, 45(C), 63-76.

Highlights

  • The study examined the impact of the expansion of health insurance for veterans through the U.S. Department of Veterans Affairs (VA) in the mid-1990s (as a result of the implementation of the Veteran’s Health Care Eligibility Reform Act) on the employment and earnings of non-covered spouses.
  • The authors used a statistical model and data from the Census Bureau’s March Current Population Survey and the Health and Retirement Study to compare the employment and earnings of wives of male veterans with wives of non-veterans of the same ages before and after the expansion of health insurance for veterans through the VA.
  • The study found no statistically significant associations between the expansion of health insurance for veterans and the employment of their wives and mixed evidence on associations between the expansion of health insurance for veterans and the earnings of their wives.
  • The quality of causal evidence presented in this report is moderate for the employment outcomes because it was based on a well-implemented nonexperimental design. This means we would be somewhat confident that any estimated effects would be attributable to the expansion of health insurance for veterans through the VA, but other factors might also have contributed. The quality of causal evidence presented in this report is low for earnings outcomes because the authors did not ensure that the groups being compared were similar before the intervention. This means we are not confident that the estimated effects are attributable to the expansion of health insurance for veterans through the VA; other factors are likely to have contributed.

Intervention Examined

Veteran Health Insurance Expansion

Features of the Intervention

The VA health care system, established in the 1930s, has historically provided health care to low-income veterans and those being treated for conditions resulting from their military service primarily through in-patient care. It is available to eligible veterans but not their spouses. In the mid-1990s, health care for veterans through the VA was expanded. Starting in 1995, the focus of care shifted from hospital-based to primary and preventive care. Further, the Veteran’s Health Care Eligibility Reform Act of 1996 expanded health care eligibility to all veterans. Copayment amounts were partly determined by a veteran’s priority group, which is determined by the VA (for example, those with service-related conditions were in the highest priority group).

Features of the Study

The authors used a statistical model (difference-in-difference model) to compare the employment and earnings of wives. They compared wives of male veterans (ages 55 to 64) with wives of non-veterans of the same ages before the policy changes (1992 to 1995) and after (1998 to 2002). The model accounted for existing differences between the groups in age, race, education, and indicators for employer-provided health insurance and pensions in the previous year, year dummies, state dummies, and state time trends. The study also showed similar trends in employment for both intervention and comparison groups pre-intervention. The study used data from the Census Bureau’s March Current Population Survey for the years 1992 to 2002 for the main analyses and data from the Health and Retirement Study for the same period for supplementary analyses. The Current Population Survey data sample included 40,518 people. Across the veteran and non-veteran groups observed before and after the health care expansion, the average age of wives ranged from 55 to 56, the majority were white (87 to 94 percent), and about 47 percent were not working.

Findings

Employment

  • The study found no statistically significant associations between the expansion of health insurance for veterans and the employment the wives of veterans relative to the wives of non-veterans.

Earnings

  • The study found no statistically significant associations between the expansion of health insurance for veterans and weekly earning of the wives of veterans relative to the wives of non-veterans. But the study did find a statistically significant association, almost a 3 percent increase, between veteran health insurance expansion and weekly earnings of the wives of veterans relative to the wives of non-veterans.

Considerations for Interpreting the Findings

The authors presented a graph of the probability of not working for intervention and comparison groups from 1992 to 1995 and stated that in the pre-reform years, veteran and non-veteran wives had very similar rates of non-participation. Therefore, the quality of causal evidence on the employment presented in this report is moderate.

The authors did not account for existing differences in earnings trends between the groups before the changes of the policy. These existing differences between the groups—and not the expansion of health insurance for veterans—could explain the observed differences in the earnings. Therefore, the quality of causal evidence on earnings presented in this report is low.

Causal Evidence Rating

The quality of causal evidence presented in this report is moderate for the employment outcomes because it was based on a well-implemented nonexperimental design. This means we would be somewhat confident that any estimated effects would be attributable to the expansion of health insurance for veterans through the VA, but other factors might also have contributed. The quality of causal evidence presented in this report is low for earnings outcomes because the authors did not ensure that the groups being compared were similar before the intervention. This means we are not confident that the estimated effects are attributable to the expansion of health insurance for veterans through the VA; other factors are likely to have contributed.

Additional Sources

Boyle, M. A., Lahey, J. N. (2010). Health insurance and the labor supply decisions of older workers: Evidence from U.S. Department of Veterans Affairs expansion. Journal of Public Economics, 94(7-8), 467-478.

Reviewed by CLEAR

October 2019

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