Health reforms in low and middle income countries usually entail the provision of free or subsidized health insurance. In this paper I examine whether this type of insurance encourages employment by freeing up resources previously used  by households  to cope with health shocks. To isolate the causal effect of providing free health insurance I use a difference in differences design that exploits the municipal (county) level variation created by the rollout of Mexico's Seguro Popular (SP). My main finding is that SP increases labor supply by retaining  workers in the labor force. I hypothesize that this  occurs because SP reduces the time burden that dependents in poor health impose on caregivers. Consistent with the proposed channel,  I find that the labor supply response triggered by SP is driven by women, and in particular by those with caregiving responsibilities. Time use estimates provide additional evidence of the mechanism, as they  illustrate that the increase in female labor supply results from the reallocation of time from caregiving tasks at home to work in the labor market. The finding that SP increases labor supply is additionally important because it highlights that the provision of subsidized health insurance does not entail an efficiency loss in the labor market. Specifically,  I show that the increase in the share of workers in jobs without employer based health insurance, that is, in informal jobs, is not driven by workers moving to less productive informal jobs, but by informal workers being retained in the labor force. Accordingly, back of the envelope calculations indicate that SP lead to a gain of a quarter of one percent of GDP. 