The Effect of Obamacare on Firm Employment and Performance

We study the impact of the Patient Protection and Affordable Care Act (PPACA) on firm employment and performance using hand-collected firm-level employee health insurance data. We show that the PPACA is associated with a significant increase in health insurance premiums for employees in company-sponsored health insurance plans. In response, companies with a large fraction of employees on their health insurance plans prior to the PPACA actively reduce enrollment in these plans after the law was enacted by shifting their employment compositions from full-time employees to part-time, temporary, or seasonal workers, who are not covered in employer-sponsored health insurance plans. We do not find any evidence of deterioration in health insurance plan quality or in performance at companies that were more exposed to the increase in health insurance premiums.