How Magnetic Can Welfare Be?

• In Event: Tax Administration, Compliance, and Mobility

Abstract

Twenty states expanded Medicaid eligibility to low-income childless adults in 2014. Did this large and costly expansion of welfare attract these newly-eligible adults to expansion states? By merging administrative tax records, Medicaid enrollment records and survey data, I find that 4.7% of these adults move interstate annually, over twice the rate reported in the Current Population Survey. Nevertheless, both state-level and border-county difference-in-differences designs detect no statistically significant impact of Medicaid on migration over the first five years. These estimates are precise enough to reject meaningful budgetary or welfare costs or benefits from migration. In contrast, I find that the same subpopulation migrated substantially in response to Great Recession local shocks. This appears difficult to reconcile with the value of Medicaid. However, it may be explained by the fact that a newly-eligible adult gains less than 2 years of Medicaid enrollment in the 5 years after moving to an expansion state, or by the confusion about enrollment that I document in survey data. Regardless of the explanation, the welfare magnet effect of Medicaid expansion was negligible.

Author

• Carl McPherson, Wellesley College