Expanding Medicaid Eligibility Would Help Low-Income Workers Find Better Jobs: Study

Official U.S. labor market data released this week showed more Americans quit their jobs in February than in any month in nearly a decade, a sign more workers are confident enough to move on from the unsatisfactory jobs they've been clinging to amid a slow pace of post-Great Recession recovery and years of anemic wage growth.

But a recent study suggests more Americans would be emboldened to switch jobs if their access to health insurance wasn’t tethered to their employers. This uniquely American system encourages so-called job lock, in which workers are fearful of migrating to potentially better-paying jobs out of fear of losing access to employer-subsidized access to medicine and doctor’s visits.

In a study released in March by the National Bureau of Economic Research, Georgetown University labor economists Ammar Farooq and Adriana Kugler found that expanding Medicaid (the U.S. public health insurance program for low-income Americans) to cover more workers would encourage them to take the risks that could lead to better-paying jobs and higher qualities of life.

“When Medicaid generosity rises, workers not only move to riskier occupations and industries but towards better jobs,” Farooq and Kugler said in the report. “We find that an increase in the Medicaid income threshold increases movement towards occupations and industries with higher median wages.”

The conclusions suggest that the uniquely American system of employer-provided health insurance discourages low-income Americans from switching jobs, leaving them with health insurance but little opportunity to get raises or promotions.

The Affordable Care Act, signed into law in 2010 and upheld by a landmark Supreme Court ruling two years later, expanded coverage, but still keeps employers largely the gatekeepers of most workers’ access to life-extending healthcare. Millions of Americans still remain either uninsured because their wages are too low to afford premiums, or they have insurance but can’t afford the out-of-pocket expenses of the plans they can afford.

The economists examined different Medicaid thresholds (the maximum amount of money a workers can make before he or she is no longer eligible for state health insurance) and found a correlation between higher Medicaid eligibility and the number of low-income workers who switched jobs that had greater wage spreads.

In other words, if more low-income workers had health coverage that wasn’t beholden to their employers, the more likely they would be to take jobs that either pay more or offer more opportunity for raises and promotions.

The research offers evidence the country’s system of employer-provided health insurance is hampering not only the ability for low-income hourly wage workers to move up the wage ladder, but could also be hampering productivity of these workers locked into jobs that don’t adequately exploit their experience and skills.