Work Incentives of Medicaid Beneficiaries and the Role of Asset Testing

38 Pages Posted: 5 Dec 2017

See all articles by Svetlana Pashchenko

Svetlana Pashchenko

University of Georgia

Ponpoje Porapakkarm

National Graduate Institute for Policy Studies (GRIPS, Tokyo)

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Date Written: November 2017

Abstract

Should asset testing be used in means‐tested programs? Focusing on Medicaid, we show that in the asymmetric information environment, there is a positive role for asset testing. Our tool is a general equilibrium model with heterogeneous agents. We find that 23% of Medicaid enrollees do not work in order to be eligible. These distortions are costly: If Medicaid eligibility could be linked to (unobservable) productivity, this results in substantial welfare gains. We show that asset testing can achieve a similar outcome when asset limits are allowed to be different for workers and nonworkers.

Suggested Citation

Pashchenko, Svetlana and Porapakkarm, Ponpoje, Work Incentives of Medicaid Beneficiaries and the Role of Asset Testing (November 2017). International Economic Review, Vol. 58, Issue 4, pp. 1117-1154, 2017, Available at SSRN: https://ssrn.com/abstract=3079097 or http://dx.doi.org/10.1111/iere.12247

Svetlana Pashchenko (Contact Author)

University of Georgia ( email )

Athens, GA 30602-6254
United States

Ponpoje Porapakkarm

National Graduate Institute for Policy Studies (GRIPS, Tokyo) ( email )

7-22-1 Roppongi, Minato-Ku
Tokyo 106-8677, Tokyo 106-8677
Japan
+818095248741 (Phone)

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