Income Variability and Eligibility for ACA Subsidies

Examining the characteristics of adults eligible for Medicaid and subsidized coverage under health reform

Dates of Project: September 2010 through August 2012

Description: From September 2010 through August 2012, Lara Shore-Sheppard, PhD, of Williams College in Williamstown, Mass., analyzed income dynamics and other characteristics of populations newly eligible for Medicaid and subsidized coverage under the Affordable Care Act (ACA).

Shore-Sheppard sought to determine the circumstances and the extent of individuals’ movements between the income groups defined by ACA and resulting changes in eligibility for different subsidy categories. She also looked at enrollment in employer-provided and public health insurance and other public programs.

Key Findings

  • Her findings will be published in two journals: Health Services Research and Journal of Human Resources.

    • Incomes are highly variable within any one year, particularly at the lower end of the income-distribution spectrum. The extent of income changes was sufficient to trigger changes in subsidy eligibility for up to a third of all adults eligible for Medicaid or subsidized coverage.
    • Shifts in employment, such as losing or getting a job, changing employers, or switching to part time, were key to income volatility. Even without periods of unemployment, they were associated with income changes both up and down.
    • Family structure also is associated with income volatility. Individuals in multiple-adult families typically have lower probabilities of declining income, while single mothers and members of minority groups (black and Hispanic) typically face greater likelihoods of declining income.
    • The sources and effects of income volatility differ substantially depending on the individual’s beginning level of income.
    • Except for food assistance, participation in public programs—potentially good outreach points for ACA enrollment and subsidy redetermination—was very low. Even in the lowest income category, fewer than 20 percent of people lived in families with at least one member on public assistance.