Significant Placebo Results in Difference-in-Differences Analysis: The Case of the ACA’s Parental Mandate

Abstract

The Affordable Care Act (ACA) lets young adults stay on their parents’ insurance. Several papers use age–time difference-in-differences strategies to argue this causes health insurance and labor effects. I show that difference-in-differences over “placebo” dates also produces statistically significant “effects” before ACA implementation, even with conservative adjustments. This suggests the effects attributed to the ACA could instead reflect dynamics in the age-structure of the health insurance and labor markets. Reducing the age bandwidth yields more reliable estimates of the increases in parental and overall insurance coverage. The key problem in this literature is therefore potentially overstating the ACA’s “effects” in other dimensions.