MEDICAID AND THE LABOR SUPPLY OF SINGLE MOTHERS: IMPLICATIONS FOR HEALTH CARE REFORM

The Medicaid expansions and health insurance subsidies of the Affordable Care Act (ACA) change work incentives for single mothers. To evaluate the employment effects of these policies ex ante, I estimate a model of labor supply and health insurance choice exploiting variation in pre-ACA Medicaid policies. Simulations show that single mothers increase their labor supply at the extensive and intensive margin by 12% and 7%, respectively, uninsurance rates decline by up to 40%, and an average family's welfare improves by 1,600 dollars per year. Health insurance subsidies and not Medicaid expansions mostly drive these effects.