Medicaid expansion increased income among newly eligible adults.

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.