Medicaid expansions and labor supply among low-income childless adults: evidence from 2000 to 2013

Cathy J. Bradley, Lindsay M. Sabik

Medicaid expansions to low-income childless adults could have unintended effects on labor supply. Using 2000-2013 current population survey data, we exploit changes in adult Medicaid eligibility across states to estimate its effect on labor supply for three samples of adults most likely to be affected by changes in Medicaid eligibility: those with less than a high school degree, a high school degree only, and income less than 300% of the federal poverty line. Medicaid eligibility was associated with a reduction in labor supply for low-income women with a high school degree. In our preferred estimations, these women were about 7 percentage points less likely to be employed than similar women in states without expanded Medicaid. Only a modest reduction was observed for weekly hours worked and then only for women with less than a high school degree and who were hourly employees (about 3 h), leading us to conclude that the effect is largely driven by those who leave the workforce. Older low-income women with a high school degree had the strongest negative response to changes in Medicaid eligibility. They were 17 percentage points less likely to be employed in states that had expanded Medicaid, possibly since these women are motivated to leave employment because they lack access to employer-sponsored insurance and have health needs that can be addressed with Medicaid coverage. Men's employment appeared largely unaffected by changes in Medicaid eligibility.