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.