Medicaid Work Requirements, Labor Market Effects and Welfare

Juergen Jung and Vinish Shrestha ()
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Vinish Shrestha: Department of Economics, Towson University

No 2024-10, Working Papers from Towson University, Department of Economics

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.

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. (search for similar items in EconPapers)
JEL-codes: D58 H51 I13 I14 I38 J21 (search for similar items in EconPapers)
Pages: 79 pages
Date: 2024-08, Revised 2025-01
New Economics Papers: this item is included in nep-dge, nep-hea, nep-lma and nep-pbe
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