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Medicaid Work Requirements, Labor Market Effects and Welfare

Author

Listed:
  • Juergen Jung

    (Department of Economics, Towson University)

  • Vinish Shrestha

    (Department of Economics, Towson University)

Abstract

We use an overlapping generations model with labor supply decisions, health risk, and health in- surance choices to investigate the impact of work requirements for Medicaid eligibility. Calibrating the model to US data, we simulate counterfactual experiments comprising a minimum weekly work hours requirement for Medicaid with exceptions for sick individuals. Our partial and general equilibrium results indicate that Medicaid work requirements increase labor force participation, reduce hours worked, and boost output. However, most scenarios result in overall welfare losses that are somewhat mitigated by general equilibrium income effects. The losses are highest among low-income households while high- income households experience welfare gains. Welfare losses become more pronounced if the reform includes work requirements for sick individuals, extending the negative welfare impact to middle-income households as well.

Suggested Citation

  • Juergen Jung & Vinish Shrestha, 2024. "Medicaid Work Requirements, Labor Market Effects and Welfare," Working Papers 2024-10, Towson University, Department of Economics, revised Jan 2025.
    • Handle: RePEc:tow:wpaper:2024-10
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    File URL: http://webapps.towson.edu/cbe/economics/workingpapers/2024-10.pdf
    File Function: First version, 2024
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    More about this item

    Keywords

    Medicaid reform; Medicaid work requirements; The Patient Protection and Affordable Care Act (ACA); Labor supply; Labor market distortions; Health risk; Section 1115 Medicaid demonstration waivers.;
    All these keywords.

    JEL classification:

    • H51 - Public Economics - - National Government Expenditures and Related Policies - - - Government Expenditures and Health
    • I13 - Health, Education, and Welfare - - Health - - - Health Insurance, Public and Private
    • I14 - Health, Education, and Welfare - - Health - - - Health and Inequality
    • I38 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - Government Programs; Provision and Effects of Welfare Programs
    • J21 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Force and Employment, Size, and Structure
    • D58 - Microeconomics - - General Equilibrium and Disequilibrium - - - Computable and Other Applied General Equilibrium Models

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