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In the paper, researchers describe how they test for early labor market effects in terms of eased job-lock from the Affordable Care Act Medicaid expansion of January 2014 that targeted non-elderly low-income adults. An expansion of health insurance options not tied to employment could increase job turnover among newly eligible low-income populations, enabling them to move to preferred jobs (measured here as higher wage jobs). They use a differences-in-differences (DD) strategy, comparing rates of job turnover and wages, after the policy implementation relative to the outcomes before the implementation, among the treatment group (low-educated populations in Medicaid expansion states) relative to the control group (similar individuals in non-expansion states). They use educational level rather than income to define groups because of the potential endogeneity of income, but caution that since education is only a crude proxy for Medicaid eligibility, measurement error may affect the results. However, they also use alternative estimation strategies and find the conclusions are unchanged. They examine triple-differences (DDD) models with an additional within-state control group of those who have higher education. They also find their results are unchanged when they use potentially endogenous measures of income; in future drafts they plan to instrument for actual eligibility with a simulated policy measure, and to use a one year lagged income measure. They conduct tests to verify that their relevant DD and DDD comparisons satisfy the common trends assumption before proceeding with their analysis, using Current Population Survey (CPS) Basic Monthly data from January 2005 through August 2014. They use these data because of large sample sizes and quick release dates. However, the CPS Basic Monthly data do not contain information on health insurance status itself. They find no statistically significant evidence that the ACA Medicaid expansion increased job turnover rates or affected wages in either their base DD or DDD models. They caution that these are early results, and come from a data set in which they cannot estimate insurance impacts to estimate the elasticity of job transition with respect to health insurance.

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• We also find our results are unchanged when we use potentially endogenous measures of income; in future drafts we plan to instrument for actual eligibility with a simulated policy measure, and to use a one year lagged income measure. (page 1)

Citation

Gooptu, A., Moriya, A. S., Simon, K. (2014). Early Effects of the 2010 Affordable Care Act Medicaid Expansion on Labor Market Outcomes. Chief Evaluation Office, U.S. Department of Labor.

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This study was part of the Department of Labor Scholars Program, and was produced outside of CEO’s standard research development process.