Understanding the associations between the labor market, Medicaid, the US healthcare industry, and health outcomes, 1999-2009

Background: The health care sector was one of the few sectors of the US economy to create new positions despite the recent recession. Growth occurred alongside declining private sector health insurance coverage and budgetary pressures on public health insurers. This study sought to evaluate the effect of the labor market (i.e. unemployment and labor force participation) on Medicaid provisions (i.e. beneficiaries and spending), health care industry composition (i.e. facilities and professionals), health status and mortality rates for working age individuals in the US.

Data and Methods: Data were collected for 50 states and the District of Columbia from 1999-2009. Unemployment, medical establishments and workforce data were obtained from the Bureau of Labor Statistics. Mortality and health status data were collected from the Center for Disease Control and Prevention. Health insurance data were derived from the Centers for Medicare and Medicaid Services and the US Census Bureau. State fixed effects regressions were used to examine the relationship between the labor market, insurance provisions, health status, and mortality rates. Regressions were also performed to model the association between insurance provisions and the composition of the health care industry. All statistical tests were based using a two-sided α significance level of p<.05. Statistical analyses were performed with STATA.

Results: Study results showed that unemployment was associated with increased numbers of uninsured, Medicaid beneficiaries, and Medicaid spending per beneficiary (p<.001). Unemployment was also associated with decreased self-reported health status and increased mortality rates (p<.001). An increase in the Medicaid beneficiary rate would positively affect the number of outpatient physician offices and home health care agencies per 100,000 (p<.001). Further, an increase in the Medicaid beneficiary rate would increase employment of physician assistants, registered nurses, home health aides, and personal care attendants per 100,000 (p<.001) while it would negatively affect employment of family and general practitioners (p<.01). Additionally, as the share of private sector spending on healthcare increases, employment of family and general practitioners, internists, and surgeons would increase (p<.05).

Conclusion: As unemployment increases so does physical distress and mortality rates for individuals aged 16-64 in the US. Unemployment is also associated with increased numbers of uninsured and Medicaid beneficiaries. Medicaid provisions also affect the industrial and occupational composition of the US healthcare industry. During economic contractions, budget cuts on public health insurance programs and reduced access to health care facilities and professionals could lead to increasing morbidity and mortality rates for working age individuals.