Labor Market Effects of Medicaid Expansion and Premium Subsidies: New Evidence from Panel Data
Audrey Guo and Jonathan Zhang
We leverage panel data for over 25,000 individuals to separately study the impacts of the Affordable Care Act's Medicaid expansion and premium subsidies on labor market outcomes. From 2014 to 2016, Medicaid expansion reduced employment in expansion states by 1.6 percentage points (pp). This decrease is concentrated among the low-income, childless, and older population, and was likely welfare-improving as it was driven by voluntary rather than non-voluntary separations. In the non-expansion states, higher initial (2014) marketplace premium subsidies increased take-up of subsidized exchange plans without any negative effects on labor supply. Among low-income individuals, employment increased by up to 2.5pp by 2016, for every $100 increase in monthly subsidy generosity.