The China Effect’s Impact on Medicaid Enrollment

Abstract

In 2010 the Affordable Care Act (ACA) was signed into law with a provision to expand Medicaid eligibility. States can choose to opt into Medicaid expansion and receive enhanced federal funding to administer their Medicaid programs. Research shows that expansion states have higher levels of health insurance coverage and better health outcomes. Between 1992 and 2010 there was a significant increase in trade with China that resulted in the loss of approximately 1.5 to 2 million American jobs. This phenomenon is often referred to as the China trade shock. During that time Chinese manufacturing imports grew from 2.3 percent to 19 percent, gutting manufacturing jobs in the American Midwest and South. Research shows that socioeconomic shocks, like job loss, are associated with poor health outcomes. Additionally, the China shock led to falling state revenues. Against this background, I hypothesize that states impacted the most by increased international trade had a monetary incentive to opt into Medicaid expansion to benefit from extra federal dollars. This study found trade-related job loss is positively associated with increased Medicaid enrollment, indicating that policymakers have many incentives to address the health and economic needs of vulnerable populations. Building on a novel dataset, this paper tests the association between job loss due to the China trade shock and increased state Medicaid enrollment.