Association for Public Policy Analysis & Management

The Affordable Care Act’s (ACA) Medicaid expansions increases access to non-employer sponsored health insurance for low-income, working-age (19-64) adults. Employed workers who qualify for Medicaid do not have to depend on their employers for health insurance coverage. Increased access to non-employer sponsored insurance for working-age adults can (1) reduce their labor force participation along both extensive and intensive margins, (2) reduce job lock, (3) extend periods out of the labor market, and (4) make them more desirable workers to employers not planning to offer ESI.

Since the passage of the ACA, 31 states and DC expanded Medicaid for working-age adults with family incomes below 138% FPL. I use the variation in Medicaid expansion status across states to evaluate the impact of expanded non-employer insurance eligibility on multiple outcomes of interest.

Gooptu et al (2016), found Medicaid expansions did not significantly impact labor force participation and job lock. But, they used approximately one year of post-Medicaid expansion data. Results can change in the long run as states robustly increased Medicaid enrollment, more states expanded Medicaid, and as the US economy recovered.

I conduct a more comprehensive evaluation of the potential labor market effects as most expansion states have continued to provide expanded Medicaid access to working age adults for over 3 years and placed more emphasis on enrolling more eligible recipients. I use the Current Population Survey monthly (CPS-Basic) from January 2005 to March 2017. I exploit the CPS monthly survey’s sample rotation structure to construct to follow low-income 19-64 year olds across 2 years and observe changes in labor market outcomes (Gooptu et al., 2016). Using a difference-in-difference identification strategy, synthetic control and detailed prior state-level Medicaid eligibility information I evaluate whether year-to-year changes in labor market outcomes are significantly different for low-income individuals in Medicaid-expansion states after states expanded.