ECONOMIC REPORT OF THE PRESIDENT

statistical area (MSA), and rural areas, defined as counties outside an MSA.
However, the population groups that had the highest risk of being uninsured
in 2010 have seen the largest gains; in particular, gains have been larger for
younger adults than for older adults, larger for lower-income individuals
than higher-income individuals, and larger for racial and ethnic minorities
than for Whites.
The ACA has also helped to reduce income inequality. As discussed in
detail above, the ACA achieved its coverage expansion in part by providing
financial assistance to low- and moderate-income individuals who obtain
coverage through Medicaid and the Marketplaces. That financial assistance
has greatly boosted income for these households. Those coverage expansions
were, in turn, financed in part through tax increases on higher-income
Americans. These and other ACA coverage provisions, together with
other tax policies enacted during the Obama Administration, are making
the income distribution in the United States considerably more equal, as
illustrated in Figure 4-16. Because of these policies, the share of after-tax
income received by the bottom fifth of income distribution will rise by 0.6
percentage point (18 percent), while the share of income received by the top
1 percent will fall by 1.2 percentage points (7 percent).
Continued Labor Market Recovery
Many critics of the Affordable Care Act argued that its coverage
expansions would seriously harm the labor market. While critics of the law
were not always explicit about how these harms would arise, some analysts
argued that the law’s provisions providing low- and moderate-income
people with affordable coverage options would reduce individuals’ incentive
to work, leading some people to leave the labor force or reduce their work
hours (such as Mulligan 2014a; Mulligan 2014b). These analysts also argued
that the ACA’s requirement that large employers offer health insurance
coverage to their full-time employees or pay a penalty would cause some
employers to shift workers from full-time status to part-time status.
Other analysts noted that the law’s coverage expansions had the
potential to drive important positive changes in individuals’ labor supply
decisions. Economists have long argued that the lack of good coverage
options for those who do not get coverage through the workplace can lead
to “job lock,” in which workers remain in a job that offers insurance coverage,
despite the fact that their time and talents could be better employed
elsewhere (for example, Madrian 1994). The pre-ACA research literature
provided some empirical support for this view. Some research has suggested
broader insurance coverage increases worker mobility and facilitates
appropriate risk-taking in the labor market (for example, Farooq and Kugler
234 | Chapter 4