The Effects on Employment and Wages When Working Mothers Lose Medicaid

Abstract

This study examines the importance of health insurance in promoting employment and wage growth for prime-age mothers. Many mothers on welfare and other low-income mothers are eligible for Medicaid, but as they move up the job ladder, they lose eligibility. Losing work supports limits mothers' ability to stay employed: mothers who make this transition into employer-provided health insurance are nine times more likely to stay employed than mothers who leave Medicaid without this benefit. However, few mothers make the transition from Medicaid to employer-provided health insurance— not because they lack employment but because they do not find jobs that offer health insurance. Between the beginning of 2002 and the end of 2003, 37.2 percent of those on Medicaid left the program, but fewer than a quarter (23.4 percent) of those had employer-provided health insurance.