Association for Public Policy Analysis & Management

More than 20% of Americans report having a disability, yet the employment and labor force participation rates among those with disabilities are strikingly low. Some have hypothesized that healthcare access for those with disabilities may limit health declines, increase labor market activity, and reduce reliance on government provided assistance through increased independence and financial stability. However, empirical studies have found both evidence to support this hypothesis and evidence to refute it. One reason for the uncertainly in the literature as to the effect of increased access to health insurance for those with disabilities is the inability of researchers to design an experiment to support causal findings—however, the expansion of Medicaid among 24 states in 2014 has allowed a unique opportunity to exploit a natural experiment to test the causal effect of increased access to health insurance. Exploring the impact of Medicaid expansion on health insurance coverage and employment is of particular importance due to the current political shifts in the United States, which may have rapid implications for disability benefits, the economy, and the healthcare market. By employing a difference-in-difference regression model and using the repeated cross-sectional nature of the American Community Survey I assessed the causal implications of increased access to health insurance through Medicaid expansion on labor market participation, health insurance coverage, and government assistance among those with disabilities. I use both a static and dynamic indicator of Medicaid expansion, and examine if effects persist when controlling for state specific time-trends. I found that the expansion of Medicaid has little effect on employment and labor force participation among those with disabilities. For healthcare coverage, on the other hand, there is robust evidence to support that Medicaid expansion is associated with an increase of a little more than two and a half percent in the insured rate for those with disabilities. In looking at those who receive public health insurance coverage, the increase is even larger, around five and half percent. For both health insurance and public health insurance the dynamic specification for the policy shock shows a trend of increasing effect size over time. When state-specific time trends are included, Medicaid is associated with a decrease in supplemental security income. For public assistance income, there is some evidence that three years after Medicaid expansion there is a decrease in the public assistance income among those with disabilities. In sum, Medicaid expansion had no effect on labor market activity, increased the percent with health insurance, and may reduce SSI receipt and public assistance income for those with disabilities. This research can inform those contentious and important political debates and policy reforms which a particular attention on those with disabilities—who are often neglected in these broader conversations. Additionally, as states continue to consider expanding Medicaid the findings of this study may help inform those decisions.