The Medicaid Buy-In program for working adults with disabilities attempts to increase workforce integration for this population. Over 70 percent of Buy-In participants also receive Social Security Disability Insurance (DI) benefits, and I examine the impact of the Buy-In program on the employment and earnings of DI beneficiaries.

To assess the impact of increased access to Medicaid on work outcomes for DI recipients, I exploit cross-state variation in the amount by which the Buy-In program increased access to Medicaid. One way the Buy-In programs incentivizes work is by raising the Medicaid income threshold for workers with disabilities. However, in some states, the Buy-In did not increase the effective income threshold facing DI recipients; in these states, the relevant Medicaid income threshold (i.e., for Aged, Blind, Disabled adults) was already at or above the income threshold set by the Social Security Administration for DI receipt (i.e., either the level of Substantial Gainful Activity or the monthly income that triggers the Trial Work Period). In other states with low Medicaid income thresholds, however, the Buy-In increased the amount DI beneficiaries could earn and receive Medicaid. Thus, states with more generous existing Medicaid programs serve as a comparison group for those states in which the Buy-In increased the income threshold for Medicaid.

Using restricted use individual-level data on DI beneficiaries from the Medicare Current Beneficiary Survey (MCBS), I find that Medicaid receipt increases most in states with the largest income threshold increases. Some states allow Buy-In participants to continue to receive Medicaid even during periods of non-work; as expected, I find that the employment responses are largest in states without such protections. Finally, I find suggestive evidence that earnings increase, conditional on employment. These findings suggest that the Buy-In may be an important program to increase the workforce integration of DI beneficiaries.