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Federal Reserve Bank of Dallas
Working Papers
Does Medicaid Generosity Affect Household Income?
Anil Kumar

Almost all recent literature on Medicaid and labor supply has used Affordable Care Act (ACA)-induced Medicaid eligibility expansions in various states as natural experiments. Estimated effects on employment and earnings differ widely due to differences in the scope of eligibility expansion across states and are potentially subject to biases due to policy endogeneity. Using a Regression Kink Design (RKD) framework, this paper takes a uniquely different approach to the identification of the effect of Medicaid generosity on household income. Both state-level data and March CPS data from 1980–2013 suggest that generous federal funding of state-level Medicaid costs has a negative effect on household income. The negative impact of Medicaid generosity on household income is more pronounced at the lower end of the household income distribution and on the income and earnings of female heads.

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Anil Kumar, Does Medicaid Generosity Affect Household Income?, Federal Reserve Bank of Dallas, Working Papers 1709, 01 Oct 2017, revised 01 Apr 2018.
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Keywords: Medicaid; household income; regression kink design
DOI: 10.24149/wp1709r1
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