Medicaid eligibility leads to higher income

A study by UC Berkeley School of Public Health researchers shows that personal income increased 9.6% for those who became newly eligible for Medicaid in states that expanded Medicaid in 2014.

Research has shown that the Affordable Care Act (ACA), also known as Obamacare, improved healthcare access for low-income Americans and that access to Medicaid had been instrumental in keeping millions of individuals out of poverty.

But this study, led by Health Policy and Management doctoral candidate Stacy Chen, is the first to examine the impact of the ACA’s expansion of Medicaid benefits on income.

In 2014, 23 states expanded access to Medicaid (18 states that expanded access before or after 2014 were not included as part of this study. The ACA’s Medicaid expansion increased income eligibility thresholds for parents, from 106% to 138% of the federal poverty level on average and, for the first time, allowed low-income childless adults to enroll.

Income for newly eligible individuals in those states were compared to income for those who would have been expanded in the 10 states who chose not to expand access to Medicaid. These states included Alabama, Florida, Georgia, Kansas, Mississippi, South Carolina, Tennessee, Texas, Wisconsin, and Wyoming.

“Gaining a better understanding of how increased access to Medicaid impacts individuals across a multitude of dimensions, including economic, is critical for the current political moment in which Medicaid funding faces substantial uncertainty,” said study co-author Becky Staiger, assistant professor of Health Policy and Management at UC Berkeley School of Public Health.

“This study provides additional evidence of the welfare benefits of access to Medicaid across multiple domains, including economic. It may inform current discussions among policymakers around levels of funding.”

“We also found that those who are newly eligible for Medicaid took less unpaid time away from work,” said Chen. “Usually, folks take unpaid time off for personal illness or to take care of sick family members. Gaining Medicaid could have allowed them to manage their illnesses better and work more. Still, having less unpaid time off only explains 12% of the increased income that we observed—it would be great to explore other drivers in future work!”

Currently, the One Big Beautiful Bill is proposing to severely restrict who can enroll in Medicaid through work requirements, reduction in state funding from the federal government, and the increased burden of re-certification of Medicaid eligibility on eligible Americans.

The results of this study hint that a decrease in individuals covered by Medicaid could have a greater impact on economics for individuals and communities.

“All of these things will lead to a reduction in Medicaid enrollment,” said Staiger. “Increasing Medicaid enrollment is increasing income—at least in part because the individual is able to get a job without worrying about health insurance, or they just have better health and so they don’t need to miss as much work for health events. That is an economic generator.”

“On the flip side, if we are now taking this protective health care away from people, we can speculate we will go back to the poor health that can lead to income loss.”