This paper examines patterns of employment and health insurance co-transitions and the role of public policies in creating an effective safety net for transitioning workers.  We are particularly interested in understanding whether individuals find ways of maintaining health coverage across employment transitions (perhaps using public health insurance, which has been expanded in recent years) or whether they allow lapses in insurance coverage. 

Because of the importance of employer-provided health insurance in the United States, there is ongoing concern as to the insurance status of people who lose their jobs.  The unattractive reality that many families must concurrently deal with an income loss and a loss of medical coverage has led policy makers to prioritize the availability of affordable insurance from both employer and non-employer sources, culminating most recently in expansions in Medicaid and subsidized private insurance through the Patient Protection and Affordable Care Act of 2010 (PPACA, hereafter ACA). 

However, over 10 years before the ACA was passed, many states began to expand Medicaid eligibility for parents of dependent children by increasing income thresholds for coverage.  These expansions in Medicaid eligibility provide an opportunity for us to assess whether public health insurance availability plays a substantive role in the insurance transitions that occur with job loss.  Most importantly, does more generous availability of Medicaid alleviate some of the uninsurance that often accompanies unemployment?

A less-examined issue – but one that should be of concern to policy makers – is the pattern of insurance transitions for previously unemployed workers who obtain a job.  To the extent that Medicaid offers a safety net during a time without an opportunity for EPHI, it is crucial to understand whether workers transition off of Medicaid when the opportunity for EPHI returns.  If Medicaid coverage is sticky, there may be more enrollment than would otherwise be expected among newly-employed workers.  While we know more generally that parental Medicaid enrollments rose with expansion in eligibility (Hamersma and Kim, 2013), understanding whether these increases are related to a stronger safety net during unemployment has not yet been explored.

Using data from the Survey of Income and Program Participation collected between 1996 and 2012, we first examine patterns of employment and insurance-status transitions over both 4-month and 1-year periods.  The transition matrix suggests that very few workers use public insurance as a safety net during employment transitions, i.e. that workers losing employment do not quickly transition to Medicaid and that workers gaining employment who were on Medicaid do not quickly leave the rolls.  We then move forward to pursue our goal of better understanding the role that Medicaid plays by exploring how expansions in Medicaid thresholds may influence some of these insurance transition patterns.  This analysis will use subsamples of employment leavers and employment entrants to better understand whether transitions in their health insurance status (and the duration of time preceding those transitions) are related to the generosity of Medicaid eligibility in their state.