The determinants of rising inequality in health insurance and wages: An equilibrium model of workers' compensation and health care policies

I develop and structurally estimate an overlapping generations equilibrium model of employment and workers' health insurance and wage compensation, to investigate the determinants of rising inequality in health insurance and wages in the U.S. over the last 30 years. I find that skill-biased technological change and the rising cost of medical care services are the two most important determinants, while the impact of Medicaid eligibility expansion is quantitatively small. I conduct counterfactual policy experiments to analyze key features of the 2010 Affordable Care Act, including employer mandates and further Medicaid eligibility expansion. I find that employer mandates reduce both wage and health insurance coverage inequality, but lower the employment rate of less educated individuals; further Medicaid eligibility expansion increases employment rate of less educated individuals, reduces health insurance coverage disparity, but causes larger wage inequality.