The Medicaid expansion is uniquely well suited to do just that. Starting in January, 25 states plus the District of Columbia will make Medicaid available to anyone making up to 138 percent of the federal poverty level, which is about $32,500 for a family of four in 2013. The other states will maintain their current eligibility rules, most of which disallow nondisabled childless adults from enrolling.
What happens then? If you agree with the dependency narrative, your hypothesis would go something like this: The states that make Medicaid available to more people should see, on average, a reduction in their employment-to-population ratios compared with states that don’t expand, as some residents in expansion states become able to obtain health coverage for free.
Conversely, the liberal hypothesis should be that there will be no difference between expansion and nonexpansion states in the share of the population that’s employed. There might even be a slight increase in the expansion states as more people get a handle on chronic health conditions and are able to work as a result.
Previous policy changes, including the adoption of Medicaid starting in the 1960s and the expansion of Medicaid in Oregon in 2008, have offered the opportunity for similar observations. But what makes next year such a good test is that it affects every state simultaneously, and those states have been split in exactly equal numbers.
That means the sample size couldn’t be bigger, and whatever effects are measured won’t be the result of different time periods. And while the test and control groups aren’t quite randomly selected, the decision over whether to take part was made by lawmakers and governors, not those whose behavior stands to be affected.
Obviously, the results of this inadvertent social experiment aren’t going to resolve the conflicting worldviews over the impact of welfare programs. And they certainly won’t justify excluding people from health insurance, which is an inherent good even if it meaningfully reduces the incentive to work.
But then again, policy positions that aspire to rise above dogma ultimately depend on data. And we’re about to get some.