Can Obamacare Help Close the Gender Wage Gap?

Women don’t need to get health insurance from their employer — which means they might start choosing better pay over better benefits.

WASHINGTON, DC - MARCH 20: U.S. House Minority Leader Rep. Nancy Pelosi (D-CA) speaks during a news conference March 20, 2014 on Capitol Hill in Washington, DC. Pelosi held the news conference to mark the 4th anniversary of the passing of the Affordable Care Act.
National Journal
Clara Ritger
May 23, 2014, 1 a.m.

Obama­care means more work­ers are get­ting health in­sur­ance. And that could mean more money for wo­men.

First, wo­men spend more on health care than men. On av­er­age, a wo­man spent $5,246 on health care in 2012, com­pared with a man’s av­er­age of $4,125, ac­cord­ing to the Health Care Cost In­sti­tute. This is partly be­cause wo­men paid high­er in­sur­ance premi­ums — in­surers used to be able to charge wo­men more than men for the same health plan, a prac­tice that was banned by the Af­ford­able Care Act. But wo­men also have high­er costs be­cause they use more health ser­vices: They are more likely to go to the doc­tor when they get sick, they live longer, and they have ba­bies.

So the Af­ford­able Care Act is sav­ing wo­men money on premi­ums. But it could also save them money each time they go to the doc­tor, be­cause more wo­men are get­ting health cov­er­age in­stead of pay­ing out of pock­et. Big em­ploy­ers are re­quired to of­fer it, the ACA in­sur­ance ex­changes provide more choices for in­di­vidu­al shop­pers, and par­ents can al­low their daugh­ters to stay on their plans longer un­der Obama­care. More in­sured wo­men means more wo­men who can split the cost of health care with their in­sur­ance com­pany.

But that’s just the tip of the ice­berg on why the Af­ford­able Care Act could boost wo­men’s in­come and help close the gender wage gap, says Amy Al­lina, deputy dir­ect­or of the Na­tion­al Wo­men’s Health Net­work. 

Al­lina says the health law’s new cov­er­age op­tions mean wo­men don’t have to worry about in­sur­ance when look­ing for a job, and that means they are more likely to shop around and find the best job with the highest wage or highest earn­ing po­ten­tial — not the one with the best health be­ne­fits.

Not re­ly­ing on an em­ploy­er for health in­sur­ance re­duces the feel­ing of “job lock,” the idea that people stay in a job that oth­er­wise pays poorly or does not of­fer op­por­tun­it­ies for ad­vance­ment be­cause they de­pend on the health cov­er­age provided by the em­ploy­er.

Wo­men are more likely to stay in a job for health in­sur­ance than men, be­cause wo­men value health in­sur­ance more, says Heidi Hart­mann, an eco­nom­ist who is also the pres­id­ent and founder of the In­sti­tute for Wo­men’s Policy Re­search.

“Wo­men have high­er out of pock­et health care costs than men, and any­thing that im­proves your dis­pos­able in­come by re­du­cing your costs is likely very valu­able,” Hart­mann said.

Hart­mann and Al­lina agree that the free­dom to shop around for a bet­ter job is im­port­ant — and Al­lina says the flex­ib­il­ity can help young wo­men pick a high-pay­ing job that will set the bar on their lifelong earn­ings.

“If you look for­ward in their lives and see what the be­ne­fit is of start­ing at a high­er wage, they will likely have high­er earn­ings over the course of their life,” Al­lina said. “Your start­ing place af­fects your end­ing place in terms of lifelong earn­ings.”

She points to some evid­ence from states that al­lowed young adults to stay on their par­ents’ plans be­fore the Af­ford­able Care Act was passed. In those states, a re­cent study from the Journ­al of Health Eco­nom­ics found, young adults saw a mod­est wage in­crease from stay­ing on their par­ents’ plans. For men, stay­ing on their par­ents’ plans meant they could stay in school and get a bet­ter de­gree — hence the wage bump. For wo­men, Al­lina says, that in­crease in earn­ings came at least in part by the flex­ib­il­ity of shop­ping around for a high­er-pay­ing job.

But not every­one agrees that Obama­care will lead to a health­i­er fin­an­cial fu­ture for wo­men. Some eco­nom­ists re­ject the idea that there are good-pay­ing jobs that wo­men just can’t take be­cause they don’t of­fer health be­ne­fits.

“Wouldn’t that be nice if it were ac­tu­ally true?” said Joe Ant­os, a health eco­nom­ist at the Amer­ic­an En­ter­prise In­sti­tute, whose résumé in­cludes time at the Con­gres­sion­al Budget Of­fice and the Health and Hu­man Ser­vices De­part­ment. “Jobs that don’t of­fer health in­sur­ance typ­ic­ally pay less. They’re aim­ing at a lower skilled part of the labor mar­ket. Tak­ing a high­er pay­ing job that didn’t have health be­ne­fits is a non sequit­ur.”

Ac­cord­ing to the Census Bur­eau’s 2012 Amer­ic­an Com­munity Sur­vey, 93.5 per­cent of full-time, private-sec­tor work­ers earn­ing an­nu­al salar­ies up­ward of $80,000 were re­ceiv­ing health in­sur­ance from their em­ploy­er.

But that’s not the only reas­on some eco­nom­ists doubt the Af­ford­able Care Act will have a pos­it­ive ef­fect on the gender wage gap. They also say that the costs as­so­ci­ated with hav­ing health in­sur­ance still re­duce over­all in­come.

Kath­er­ine Baick­er, an eco­nom­ist and a pro­fess­or at the Har­vard School of Pub­lic Health, who also serves as an ad­viser to the Con­gres­sion­al Budget Of­fice, points out that wo­men who don’t get their in­sur­ance from their em­ploy­er — wheth­er they’re stay­ing on a par­ent’s plan or shop­ping for cov­er­age on their own — are still pay­ing a por­tion of their wages to­ward the cost of health in­sur­ance. A job that of­fers health in­sur­ance prob­ably pays less than a job that of­fers no be­ne­fits, but that’s be­cause health in­sur­ance car­ries a mon­et­ary value when em­ploy­ers are eval­u­at­ing an em­ploy­ee’s total com­pens­a­tion.

“Hav­ing health in­sur­ance in and of it­self seems un­likely to af­fect the gender wage gap,” Baick­er wrote in an email.

Wheth­er the health law will make a dent on the gender wage gap isn’t clear. In fact, one eco­nom­ist of­fers an even bleak­er out­look: Obama­care will ac­tu­ally widen the in­come dis­par­ity between men and wo­men.

An­drew Biggs, a former So­cial Se­cur­ity Ad­min­is­tra­tion of­fi­cial and a cur­rent schol­ar at the Amer­ic­an En­ter­prise In­sti­tute, says the health law cre­ates an in­cent­ive for wo­men to work less be­cause they’ll be able to get health in­sur­ance else­where — and that will ex­pand the gender wage gap.

“The gender pay gap is driv­en al­most en­tirely by wo­men tak­ing time out of the work­force to have kids,” said Biggs. “To re­duce the gender pay gap, es­sen­tially wo­men have to work more. But wo­men’s labor sup­ply is more sens­it­ive than men’s is. You have some wo­men who are work­ing so they could get health in­sur­ance. If they could get it without work­ing, you may have less work­ing.”

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