Medicaid Expansion, the Marriage Penalty, and Marital Transitions

• In Event: Do Policy Levers Close Racial Gaps? Evidence Across Wealth, Taxation, and Higher Education

Abstract

This paper examines how the Affordable Care Act’s Medicaid expansion affected marriage and divorce behavior among low-income adults, with particular attention to cohabiting couples and racial heterogeneity. Means-tested public programs can shape family decisions because eligibility often depends on household income and family structure. In this setting, marriage may reduce access to public benefits when a partner’s income is counted toward eligibility, while divorce may restore eligibility for some individuals. By expanding Medicaid eligibility for low-income adults, the ACA changed the insurance value of marriage and may therefore have altered incentives surrounding marriage formation and marital dissolution.

This study uses the American Community Survey microdata from 2010 to 2019 and variation in the timing of state Medicaid expansion. The empirical strategy uses a staggered Difference-in-Differences design to estimate the effect of expansion on several family-formation outcomes among low-income adults. The analysis examines married stock, marriage flow, divorced stock, divorce flow, and cohabitation, and also considers whether responses were concentrated among couples near Medicaid eligibility thresholds, where household-based eligibility rules are most likely to matter. In addition, the paper explores whether the effects differ across white and Black females.The results show that Medicaid expansion is associated with a modest decline in married stock and an increase in divorce flow among low-income adults. These findings are consistent with the interpretation that expansion reduced the insurance-related value of marriage and lowered the economic cost of marital dissolution for newly eligible groups. By contrast, the estimated effects on marriage flow, divorced stock, and cohabitation are not statistically significant on average. Among cohabiting couples near the eligibility threshold, the estimates provide suggestive evidence that household-based eligibility rules may have discouraged marriage. However, these estimates are not statistically different from the estimates for couples less directly affected by the threshold. No significant evidence was found of differential effects across white and Black females.

This paper adds to research on the family effects of means-tested programs by showing that health insurance policy may influence not only coverage and financial protection but also family-formation incentives. It extends the Medicaid expansion literature beyond insurance, health care use, and labor market outcomes to examine marriage and divorce behavior. Additionally, it contributes to work on inequality by testing whether the family effects of expansion differ across racial groups.

Overall, the findings suggest that Medicaid expansion affected not only access to insurance but also the economic incentives embedded in family decisions for low-income adults. At the same time, the evidence points to modest behavioral responses and limited support for strong heterogeneity by race. These results highlight the importance of considering family-formation incentives when evaluating the broader consequences of public insurance expansions.

Author

• Haiyue Jiang, University of Minnesota
  Presenting Author