Medicaid Expansion and Employment Outcomes for Working Age Adults with Disabilities

• In Event: Revisiting Medicaid Expansion and Work: Labor Supply, Coverage, and Economic Adjustment Across Populations

Abstract

The Affordable Care Act Medicaid expansion was one of the most significant health policy reforms in recent decades. It allowed states to extend Medicaid eligibility to non-elderly adults with incomes up to 138 percent of the federal poverty level and substantially increased health insurance coverage among low-income adults. However, its implications for working-age adults with disabilities remain unclear. Disabled adults have persistently low employment rates and depend heavily on stable health coverage to manage chronic conditions. Understanding how expanded public insurance shapes their labor market behavior is essential for evaluating the broader consequences of Medicaid policy. Recent rapid policy changes in Medicaid under the Trump administration make updated evidence especially important.This study examines the impact of the Medicaid expansion on employment outcomes for working-age adults with disabilities. Expanded coverage may reduce reliance on employer sponsored insurance and lower incentives to remain in the labor force. At the same time, expansion may relax long standing work disincentives in disability programs by offering a pathway to public insurance that does not require extremely low income or labor force withdrawal. These competing forces create theoretical ambiguity regarding the direction of the employment effect.The primary data source is the Survey of Income and Program Participation from 2008 to 2024. The SIPP provides monthly information on disability status, labor market outcomes, and participation in safety net programs. Disability is identified using the standard six question functional limitation sequence, which allows for detailed tracking of disability onset, duration, and severity. State level information on Medicaid expansion timing is merged with the SIPP to construct treatment and comparison groups.The empirical strategy exploits the staggered rollout of Medicaid expansion across states. The main specification estimates a two-way fixed effects model, and the analysis also applies a heterogeneous treatment timing estimator to address concerns related to variation in adoption timing. Subgroup analyses examine heterogeneity by SSI and SSDI participation, disability history, household income, age group, and educational attainment. Primary outcomes include employment status, earnings, hours worked, and transitions across industries and sectors.The preliminary results indicate that the overall impact of the expansion on employment is inconclusive and varies across subgroups. Employment increases appear concentrated among individuals who recently became disabled and are under age fifty, while individuals over fifty with ongoing disabilities experience declines in employment and increases in SSDI participation.These findings clarify how expanded public insurance shapes labor market behavior among disabled adults. By identifying which groups benefit from the expansion and which experience reduced employment or increased reliance on disability programs, the study provides evidence that can inform ongoing debates about Medicaid eligibility, work incentives, and the coordination of Medicaid with SSI and SSDI. As states continue to modify Medicaid programs and as federal disability programs face rising caseloads and administrative pressures, understanding these heterogeneous effects is essential for designing policies that promote equitable access to health coverage and sustainable pathways to employment.

Author

• Sungjin Lee, San Diego State University
  Presenting Author