New research from Wharton reveals that after Medicaid expansion, wages remained stagnant for the lowest-paid health care workers—such as aides, orderlies, and sanitation staff—while the highest-paid workers, including doctors, nurses, and managers, saw their earnings rise by about 2.2% per year.

The study suggests that hospital systems may be worsening income inequality. The lowest-paid workers, who are often minority women, have limited bargaining power and face significant barriers to advancement.

Structural marginalization

“These workers are already marginalized, and health care organizations are unintentionally contributing to this structural marginalization,” the researchers explain. “It’s likely not deliberate, but it’s a concerning spillover effect.”

The findings are particularly troubling because aides, orderlies, and sanitation workers play a crucial role in patient care, and previous research has linked their compensation to patient safety and experience.

“Lower-wage health care workers are essential to delivering quality health care. The pandemic highlighted the need for every team member, regardless of their pay level,” the authors note.

The study compared economic outcomes for over 1.3 million health care workers across 30 states that expanded Medicaid, against those in 16 states that did not. Using data from the 2010-2019 American Community Surveys, researchers examined income levels and changes in employer-sponsored health insurance, Medicaid, and Supplemental Nutrition Assistance Program (SNAP) benefits.

Poor pay

Although the lowest-paid workers didn’t see wage increases, they were about 3% more likely to receive Medicaid benefits after the expansion. However, they also experienced declines in employer-sponsored health insurance and a rise in SNAP benefits.

“Medicaid expansion has enriched health care organizations, but it’s unclear how these profits are being used,” the researchers say. “Management theory suggests that investing in workers benefits organizations, so we wanted to see if these gains were shared with all employees.”

The study couldn’t differentiate between low-wage workers directly employed by hospitals and those contracted by them. But the increase in Medicaid recipients and the drop in employer-sponsored insurance among low-wage workers suggest that contracting companies lack incentives to raise wages.

“This suggests that Medicaid expansion may have allowed health care organizations to boost their profits by relying more on contracted workers,” the authors explain.

Despite limitations, such as not tracking individual wage changes, the researchers believe hospital systems should consider these findings when setting wages and benefits for their lowest-paid workers, who are vital to patient care.

“Even before COVID-19, many health care workers were burned out, a problem only worsened by the pandemic,” the authors conclude. “Health care organizations might be harming themselves by not investing in their lowest-paid employees.”