Disability Labor Economics Medicaid

How did the Medicaid expansion impact employment among the disabled?

Gaining insurance through Medicaid is likely to have diverse impacts in terms of how likely disabled individuals are to work. On the one hand, having access to health care may improve health outcomes and better enabled disabled individuals to recover (if they are short-term disabled) or better manage their disability (if they are long-term disabled). On the other hand, without Medicaid, disabled individuals may be more likely to work because they need employer-provided health insurance if Medicaid were not available. This type of heterogeneity is exactly what a paper by Ne’eman and Maestas (2023) examines. They use 2008-2019 Current Population Survey (CPS) data and segment the population by disability type, disability recency and labor force attachment. With this approach, they find the following results:

Among persons with higher labor force attachment, we find that Medicaid expansion reduced the employment rate of persons with new disabilities by a statistically significant -3.2%, while there was a precisely estimated null effect for persons with ongoing disabilities. Among those with lower labor attachment, we find suggestive evidence of offsetting treatment effects among persons with new versus ongoing disabilities. Medicaid expansion increased the employment rate of persons with ongoing disabilities by 10.5% but decreased the employment rate of persons with new disabilities by -9.2%. However, these latter estimates for persons with lower labor force attachment are imprecisely estimated, limiting the conclusions that can be drawn from them.

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