Medicaid Expansion Spurs Income Bunching

Evidence after the ACA shows self‑employed households clustered their reported income just below the 138% poverty cutoff for Medicaid without reducing work hours. This pattern—'bunching'—signals strategic underreporting to qualify rather than genuine earnings declines. Program thresholds can change reporting behavior at scale. — Designing safety‑net cutoffs without robust verification can grow the shadow economy, distorting tax bases and policy evaluation.

Sources

What's Different about Health Care?

Arnold Kling 2025.12.01 48% relevant

The essay critiques standard insurance design and proposes multi‑year high‑deductible policies to alter incentives; this connects to the broader theme in the existing idea that program rules and thresholds reshape individual economic behavior (e.g., income reporting, coverage take‑up), highlighting that insurance architecture matters for real‑world responses.

America’s Growing Shadow Economy

Chris Pope 2025.10.08 100% relevant

The article cites a study finding taxable‑income bunching below 138% FPL post‑Medicaid expansion and IRS audit data showing rising misreporting among the bottom quintile (2006–2015).