Medicaid expansion increased income among newly eligible adults
Medicaid expansion increased income among newly eligible adults
Authors: Stacy Chen, Becky Staiger
Citation: Chen, Stacy and Staiger, Becky (2025). Medicaid expansion increased income among newly eligible adults. Health Affairs Scholar, 3(5).
Abstract: The Affordable Care Act’s Medicaid expansion improved health care access for low-income Americans; however, its impact on economic outcomes—particularly income—is less clear. We used US Census administrative income data that tracked 6120 cohorts covering 84% of working-age adults from 2005 to 2019. Using difference-in-differences, we compared changes in income among low-income adults living in expansion states, before and after expansion, with changes in income in low-income adults living in non-expansion states. Low-income adults living in Medicaid-expansion states experienced an average 9.5% relative increase in income in the 5 years after expansion. This impact was concentrated among adults who were likely newly eligible for Medicaid after the expansion. These adults experienced a 9.6% relative increase in income, as well as a 2.1 percentage point (7.3%) relative higher likelihood of having income in the 40th income percentile or higher. We found suggestive evidence that a reduction in unpaid time off from work drove a small part of this relative income increase among those newly eligible. While Medicaid funding faces substantial political uncertainty, this evidence suggests that welfare gains to newly eligible individuals include economic, as well as health, improvements.
Seminar Notes
Venue
Opportunity Lab Conference 2025
Objective
To measure the effect of Medicaid eligibility on income and labor market participation
Importance
Medicaid funding is currently at risk. Research has shown huge benefits of expanded Medicaid access
Background
Medicaid expansion 2014 through ACA
Previously eligible: pregnant women, children, elderly
Expansion - all low income
Could result in better health, more make jobs that were higher income but fewer benefits more available, which would increase income.
Could also allow people to drop out of labor force, which would lower income.
Data & Key Variables
Mobility, Opportunity, and Volatility Statistics (MOVS) - demographic and tax records for 95 million adults ages 25-50 for years 2005-2019.
Cohorts by birth year * sex * race/ethnicity * 2005 state * 2005 income decile
Methodology
Diff in diff/event study with Medicaid eligibility defined by 2009 income and expansion/non-expansion state
Outcomes: ln(income), share of cohort in >40th percentile, labor force participation
Results
Medicaid eligibility increases income by 9.6%
Key Table/Figure
