Do Work Decisions among Young Adults Respond to Extended Dependent Coverage?

Young adults aged 19-24 are significantly less likely to have health insurance since most family insurance policies cut off dependents when they turn 19 or finish college. In recent years, several states in the United States have expanded eligibility to allow young adults to remain covered under their parents' employer-provided health insurance. For those who qualify for these benefits, the expansion of parental dependent coverage partially reduces the value of being employed by a firm that provides health insurance or of working full-time, as adult children can now obtain health insurance through another channel. In this study, we employ quasi-experimental variation in the timing and generosity of states' eligibility rules to identify the effect of the policy change on young adults' labor market choices. Our results suggest that the expansion of dependent coverage increases the group dependent coverage rate and reduces labor supply among young adults, particularly in full-time employment. The results are robust to a variety of empirical specifications and sample selection.