Abstract
Although the 1996 welfare reform legislation limited the eligibility of immigrant households to
receive assistance, many states chose to protect their immigrant populations by offering state-funded
aid to these groups. I exploit these changes in eligibility rules to examine the link between the welfare
cutbacks and health insurance coverage in the immigrant population. The data reveal that
the cutbacks in the Medicaid program did not reduce health insurance coverage rates among targeted
immigrants. The immigrants responded by increasing their labor supply, thereby raising the
probability of being covered by employer-sponsored health insurance.
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