Does health insurance always increase medical spending? Evidence from the affordable care act dependent mandate

Abstract

The Affordable Care Act Dependent Mandate (ACA-DM) has increased young adults’ health insurance coverage through parents’ employer-sponsored health insurance. This could have increased employers’ labor costs and thus reduced parents’ wages. In this study, we examine the effects of the ACA-DM on family income and medical spending. Using a difference-in-differences approach, we find evidence that the ACA-DM decreased family income but did not increase young adults’ medical spending. The results imply that expansion of health insurance coverage does not necessarily increase medical spending if it is achieved through labor markets and decreases family income.