Medicaid and Mothers ’ Employment and Wages

Welfare reform promised welfare mothers that if they went to work, they would receive the work supports and assistance necessary to help them find and keep employment. Congress has fulfilled some of that promise in that expenditures on work supports have increased since the early 1990s. However, work supports are generally time-limited and phase-out quickly as income rises. This limits the ability of mothers to stay employed because most do not easily transition off government work supports into private-sector work supports. Because of time-limits and phase-outs, low-income and welfare mothers lose eligibility for Medicaid and other work supports as they move up the job ladder. Employer-provided health insurance is an option for those lucky enough to have found a job that provides it. However, few mothers make the transition from Medicaid to employer-provided 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 of those had employer-provided health insurance. The problem is not that Medicaid leavers lack employment, but that they do not find jobs offering employer-provided health insurance. Among those who left Medicaid in the late 1990s, the share moving from a job without employer-provided health insurance to one with insuranc