Medicaid Expansion Does Not Appear to Explain the Recent Acceleration in Health Sector Job Growth

Thursday, December 11, 2014

As my colleagues and I at Altarum Institute’s Center for Sustainable Health Spending have observed in our recent Health Sector Economic IndicatorsSM Labor Briefs, health sector job growth has accelerated during 2014. An average of 27,000 health jobs per month were added starting in the second quarter of 2014 (April–November 2014), compared to an average of 17,500 jobs per month for the previous 12 months (April 2013–March 2014).[1] The acceleration is seen in both ambulatory care settings and hospitals. The source of these figures, the Bureau of Labor Statistics (BLS) monthly Current Employment Statistics (CES) survey, provides timely data on jobs by industry but does not shed light on the underlying causes of changes in job growth.

Figure 1: Growth in Health Care and Social Assistance Jobs

States Expanding Medicaid

Source: Altarum analysis of BLS Current Employment Statistics survey data. Data are seasonally adjusted.

Given the timing of the increase, it was reasonable to hypothesize that it was associated with expanded health insurance coverage under the Patient Protection and Affordable Care Act (ACA). New coverage under ACA generally began in January 2014, but there were lags in coverage signups and in seeking and receiving care; an increase in hiring by the second quarter was plausible. We decided to see whether state-level data provided evidence that expanded coverage could explain the jump in jobs.

Our initial look divided the states into two groups: those that have expanded Medicaid under ACA and those that have not. Many of the newly insured in 2014 were new Medicaid enrollees, so if the 2014 increase in job growth were due to expanded coverage, one would expect to see a larger effect in the Medicaid-expanding states. Comparing two periods, April–October 2014 versus the previous 12 months, in Figure 1, we observe that job growth actually accelerated more in the nonexpanding states (104% increase) than in the expanding states (46% increase).[2],[3]

Based on this comparison of the two groups of states, Medicaid expansion does not appear to explain the acceleration in health sector job growth that began around the second quarter of 2014. Are there other explanations for the acceleration? Or are there reasons that this comparison might not reveal the expansion effect? I briefly explore other data and research that point to possible answers.

Nationally, the acceleration in health sector job growth tracks the overall labor market; total nonfarm jobs grew 37% faster, starting in the second quarter of 2014 (260,000 jobs per month), compared with the previous 12 months (190,000 jobs per month). Jason Furman, Chairman of the President’s Council of Economic Advisors, in a December 5 White House blog, notes a pickup in the pace of job growth in 2014 in a number of industries in addition to health care and social assistance, including manufacturing, construction, and state and local government. Thus, some, though not all, of the acceleration in health jobs could reflect overall economic growth.

As researcher David Auerbach has written*, the impact of expanded coverage on the demand for health care services, and therefore the demand for health workers, may not be as large as some expect. A small impact may not be visible over other state-level labor market dynamics.

Finally, a report just released by the Urban Institute on results from their Health Reform Monitoring Survey shows that while the percentage of people who are uninsured has dropped more in Medicaid expansion states (36%) than in nonexpansion states (24%), the drop in nonexpansion states was more significant than anticipated. States vary in the uninsurance rate, the success of their insurance exchange, employment increases and the associated increase in employer-sponsored insurance coverage, and even the timing of any Medicaid expansion. A more refined measure of changes in coverage than Medicaid expansion status may be needed to detect an impact on job growth.

This preliminary analysis shows that the recent acceleration in health care job growth should not be attributed primarily to Medicaid expansion, in part because (1) overall job growth accelerated, (2) the impact of expanded coverage on demand may turn out to be small compared to other forces, and (3) an expanded coverage effect may be present in both groups of states to a greater extent than we expected. It is important to emphasize that this is not a test of whether expanded coverage increases jobs but whether the recent acceleration in health job growth can be attributed to expanded coverage, as measured by Medicaid expansion status. Our Center will continue to explore the more challenging question of the impact of expanded coverage on health care jobs and on the labor market more broadly.

*David Auerbach was identified as being affiliated with RAND, but since writing the blog cited, he has moved to a position with the Massachusetts Health Policy Commission.


[1] We chose to compare to the previous 12 months, but the results are similar if we compare to other recent periods such as January 2013–March 2014 or calendar year 2013, both of which show average monthly growth of about 17,000 jobs.

[2] State-level CES employment data were available for the category “Health Care and Social Assistance” for all states except Alaska, Delaware, and New Mexico, which were therefore omitted from this analysis. Nationally, health care constitutes about 80% of the category.

[3] This figure is an updated version of a chart published in Modern Healthcare, with a few refinements, including moving Pennsylvania from the expanding category into the nonexpanding category, since their Medicaid expansion does not begin until 2015.

All postings to the Health Policy Forum (whether from employees or those outside the Institute) represent the views of the individual authors and/or organizations and do not necessarily represent the position, interests, strategy, or opinions of Altarum Institute. Altarum is a nonprofit, nonpartisan organization. No posting should be considered an endorsement by Altarum of individual candidates, political parties, opinions or policy positions.



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