Health Insurance and Human Capital: Evidence from the Affordable Care Act's Dependent Coverage Mandate

Prior to 2010, young adults between the ages of 18 and 34 had the highest rates of uninsurance in America. The "Dependent Care Provision" of the Affordable Care Act sought to increase insurance rates among young adults by allowing them to stay on their parents' policy until age 26. We examine the human capital decisions young adults make once they have an option for health insurance outside of employer-sponsored health insurance. Using the American Community Survey from 2001 to 2016 and a difference-in-differences research design, we found that the implementation of the mandate was associated with a 3-5 percent increase in college enrollment among women 23-25 years of age. This result is robust to a variety of specifications. We did not find a consistent effect among men. Our results suggest that increased flexibility in health insurance markets has implications for human capital investment.