Medicaid Expansions and Black-White Inequalities in Augmented Income Poverty. Brady, D., Mekonnen, H., & Kaestner, R. In 2024 APPAM Fall Research Conference, 2024. APPAM.
abstract   bibtex   
Black people under age 65 were approximately three times more likely to be poor than white people in 2009-2019. Despite valuable research on racial inequalities, no study has incorporated the value of health insurance in the calculation of Black-white gaps in poverty. This study investigates the consequences of monetizing health insurance generally and state-level Medicaid expansions specifically for Black-white inequalities in poverty. We use the Panel Study of Income Dynamics (PSID) for over 8100 Black and white under-65 individuals observed bi-annually 2009-2019. Using the Cross-National Equivalent File’s additions to the PSID, we start with post-fisc income (i.e. all income sources, taxes, transfers and tax credits). Following Remler and Korenman’s pioneering method, we assign a dollar value to Medicaid and Medicare based on the second lowest cost Silver plan in the state-year specific Obamacare exchanges. Using data from the Centers for Medicare and Medicaid Services, we also assign the year-specific average dollar values of employer contributions to employer-provided and military-provided health insurance. We then recalculate “augmented” household income and adjust for household size. We then construct measures of year-specific augmented relative and anchored poverty. Similar small shares of Black and white people resided in the earliest states to expand Medicaid. Since 2009 however, the share of white people in Medicaid expansion states grew faster than the share of Black people. By 2019, almost 80% of white people but barely 60% of Black people resided in Medicaid expansion states. While a greater share of Black people receive Medicaid and Medicare, a greater share of white people receive even more fiscally valuable employer-provided health insurance. Further, Black people are more than twice as likely as white people to lack health insurance. Despite these patterns, we show there is an even more pronounced decline in Black-white inequalities in augmented poverty than in poverty omitting health insurance. We use three-way fixed effects (person, state, year) linear probability models to test the effect of Medicaid expansions. We find Medicaid expansions significantly reduced the Black-white gap in augmented relative and anchored poverty. Compared to the mean gap 2009-2019 of about 20 percentage points, Medicaid expansions are associated with an approximately 5 percentage point reduction in Black poverty compared to white poverty. Hence, Medicaid expansions reduced by about one-quarter the Black-white gap in poverty. This result is robust across various model specifications and sample comparisons. This result is also robust across a variety of alternative estimators. There is some non-robust evidence that Medicaid expansions induced slightly higher white poverty. However, there is stronger evidence that Medicaid expansions raised the value of health insurance for Black people and there is no evidence of effects on Black-white employment differences. There is also evidence that Medicaid expansion narrowed Black-white gaps in marriage and the number of children, both of which influence poverty. Other analyses show there was no effect of Medicaid expansions on poverty for all. We conclude that failing to augment income with monetized health insurance would underestimate how Medicaid expansions reduced Black-white inequalities in poverty.
@inproceedings{
 title = {Medicaid Expansions and Black-White Inequalities in Augmented Income Poverty},
 type = {inproceedings},
 year = {2024},
 publisher = {APPAM},
 id = {fdec4066-dbcf-3768-b541-1c48547141ac},
 created = {2025-05-29T17:07:27.559Z},
 file_attached = {false},
 profile_id = {7a51828e-9782-3fa4-8bdb-357443954bfc},
 group_id = {0ee58a72-7b45-3b48-b23d-56896447a1bc},
 last_modified = {2025-05-29T17:07:27.559Z},
 read = {false},
 starred = {false},
 authored = {false},
 confirmed = {false},
 hidden = {false},
 private_publication = {false},
 abstract = {Black people under age 65 were approximately three times more likely to be poor than white people in 2009-2019. Despite valuable research on racial inequalities, no study has incorporated the value of health insurance in the calculation of Black-white gaps in poverty. This study investigates the consequences of monetizing health insurance generally and state-level Medicaid expansions specifically for Black-white inequalities in poverty.
We use the Panel Study of Income Dynamics (PSID) for over 8100 Black and white under-65 individuals observed bi-annually 2009-2019. Using the Cross-National Equivalent File’s additions to the PSID, we start with post-fisc income (i.e. all income sources, taxes, transfers and tax credits). Following Remler and Korenman’s pioneering method, we assign a dollar value to Medicaid and Medicare based on the second lowest cost Silver plan in the state-year specific Obamacare exchanges. Using data from the Centers for Medicare and Medicaid Services, we also assign the year-specific average dollar values of employer contributions to employer-provided and military-provided health insurance. We then recalculate “augmented” household income and adjust for household size. We then construct measures of year-specific augmented relative and anchored poverty.

Similar small shares of Black and white people resided in the earliest states to expand Medicaid. Since 2009 however, the share of white people in Medicaid expansion states grew faster than the share of Black people. By 2019, almost 80% of white people but barely 60% of Black people resided in Medicaid expansion states. While a greater share of Black people receive Medicaid and Medicare, a greater share of white people receive even more fiscally valuable employer-provided health insurance. Further, Black people are more than twice as likely as white people to lack health insurance. Despite these patterns, we show there is an even more pronounced decline in Black-white inequalities in augmented poverty than in poverty omitting health insurance.

We use three-way fixed effects (person, state, year) linear probability models to test the effect of Medicaid expansions. We find Medicaid expansions significantly reduced the Black-white gap in augmented relative and anchored poverty. Compared to the mean gap 2009-2019 of about 20 percentage points, Medicaid expansions are associated with an approximately 5 percentage point reduction in Black poverty compared to white poverty. Hence, Medicaid expansions reduced by about one-quarter the Black-white gap in poverty. This result is robust across various model specifications and sample comparisons. This result is also robust across a variety of alternative estimators. There is some non-robust evidence that Medicaid expansions induced slightly higher white poverty. However, there is stronger evidence that Medicaid expansions raised the value of health insurance for Black people and there is no evidence of effects on Black-white employment differences. There is also evidence that Medicaid expansion narrowed Black-white gaps in marriage and the number of children, both of which influence poverty. Other analyses show there was no effect of Medicaid expansions on poverty for all. We conclude that failing to augment income with monetized health insurance would underestimate how Medicaid expansions reduced Black-white inequalities in poverty.},
 bibtype = {inproceedings},
 author = {Brady, David and Mekonnen, Hemen and Kaestner, Robert},
 booktitle = {2024 APPAM Fall Research Conference}
}
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