Study: Medicaid Expansion Will Raise Unemployment

May 19, 2014

A new study reveals that Obamacare's Medicaid expansion will lead to significant unemployment among childless adults, reports Lanhee Chen, research fellow at the Hoover Institution.

A new National Bureau of Economic Research paper  analyzed the impact of Medicaid expansion on work incentives, specifically among low-income adults without children.  Previously ineligible for Medicaid, childless adults now have access to the program through the Obamacare expansion.

The study found that if the Medicaid expansion enrolls 21 million additional adults into the program, 511,000 to 2.2 million fewer Americans will be employed. In fact, the labor force participation rate -- which measures the portion of the U.S. population that is working or actively looking for work -- would drop an entire point. Already, the participation rate is at its lowest point since 1977.

The paper is strong evidence, Chen writes, that enrolling in Medicaid traps Americans, making it difficult for them to rise out of poverty. The results are similar to that of another study from 2013, which found that the loss of public health insurance incentivized people to search for jobs and led to employment growth.

There is no deadline for states to decide to expand their Medicaid programs, and five states are currently considering doing so.

Source: Lanhee Chen, "Best Argument Yet Against Medicaid Expansion," Bloomberg, May 15, 2014.

 

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