The Workforce Implications of the Medicaid Program: Is Medicaid a Work Disincentive?
This study analyzes the relationship between Medicaid and workforce participation. Current literature has investigated the impacts of Medicaid on beneficiaries measured and self-perceived health status, as well as the impact of access to care on workforce participation and performance. This study adds to that body of research by considering the effects of Medicaid on workforce participation, continuity, and compensation.This study investigates the workforce implications of Medicaid by analyzing the impact of the Medicaid program on: the likelihood that an individual is unemployed; the number of hours an individual works; the hourly wage of an individual; and the number of days an individual stays home from work due to illness or injury. The first analysis is a relatively straightforward investigation of Medicaid's effect on workforce participation. The subsequent analyzes are intended to tease out the potential positive health effects of Medicaid program participation. Survey respondents with access to health services through Medicaid may have improved health, allowing them to advance in their careers and increase their earnings. They may also be more capable of managing illnesses or disease, increasing the number of hours they work and decreasing the number of days they miss work due to illness.This study applies Ordinary Least Squares (OLS), Two Stages Least Squares (2SLS), and bivariate probit regression methodologies. Data on program and workforce participation was gathered from the Medical Expenditure Panel Survey (MEPS). The models in this study control for a variety of personal, social, and economic characteristics to more accurately specify the effects of Medicaid on employment.This study finds that Medicaid is positively correlated with both unemployment and the number of days individuals miss work due to illness, which supports the theory that Medicaid may be a work disincentive. However, Medicaid is also positively associated with hourly earnings and the number of hours worked, suggesting that Medicaid may also have work incentive effects. These effects vary based on the comparison population - non-beneficiaries, the uninsured, or the privately insured - suggesting that the impact of the Medicaid program depends on whether the program crowds out private insurance or provides coverage to the uninsured.
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