Under Affordable Care Act, Minimum Wage Hike Discourages Work or To Raise the Minimum wage or not.

Most criticisms of minimum wage increases focus on its employment effects. Some minimum wage earners will be priced out of the labor market and find themselves unemployed. But due to the perverse incentives in our welfare system, some of those who keep their jobs may find that higher wages result in a loss of Medicaid benefits.
This means that raising the minimum wage to $10.10 per hour would substantially increase disincentives to work. Under a $10.10 minimum wage, any childless adult who takes a full-time, year-round job would need to give up access to Medicaid.
In the 26 states plus the District of Columbia that have expanded Medicaid under the ACA, any nonelderly person whose income is below 138% of the poverty line is eligible for Medicaid coverage. However, the poverty line differs according to household size. For a single adult, the Medicaid eligibility threshold is $16,105. With a wage of $7.25 an hour, this individual could enroll in Medicaid. However, with a wage of $10.10, he no longer qualifies.
Over half of minimum wage earners work part time, but those who work full-time for the current minimum wage of $7.25 an hour earn about $13,195 per year. Raising the minimum wage to $10.10 an hour, as President Obama has proposed, would raise their annual income to $18,382 if they kept their jobs--an increase of $5,187. This would be a decent deal were it not for the Affordable Care Act's Medicaid expansion.
Under the minimum wage increase President Obama proposes, full-time workers with previous wages below $8.53 per hour would be at risk of losing Medicaid coverage. All these people would thus be forced to buy insurance through the federal exchanges at a higher cost. While many would receive subsidies, these phase out as income rises, which could leave low-income Americans spending hundreds or even thousands of dollars for exchange coverage.
Before Medicaid expansion under the Affordable Care Act, Medicaid eligibility generally applied to certain categories of people, including children, pregnant women, and people with disabilities. This is still the case in the 23 states that have not expanded Medicaid. These categorical eligibility requirements limited work disincentives by making income level a secondary condition of coverage. Under the ACA, however, income level is the primary condition for Medicaid eligibility. Moving up the income ladder increasingly means loss of Medicaid coverage.
In 2012, average per capita spending for able-bodied adults on Medicaid was $4,101. Even though recent evidence from a randomized study in Oregon suggests that Medicaid coverage has no measurable effect on physical health outcomes, people do value having Medicaid coverage. The same study found that Medicaid beneficiaries had a better self-reported quality of life. This implies that people will take Medicaid coverage into account when making career choices.
It is an advantage to the administration that raising the minimum wage would force some people off Medicaid and on to the health care exchanges. The administration is actively seeking young people to sign up for insurance through the exchanges in order to counteract the high healthcare costs of older enrollees. Singles who earn close to minimum wage are likely to be younger and healthier than the average enrollee. According to the Bureau of Labor Statistics, 71 percent of minimum wage earners are below the age of 35.
This phenomenon highlights one of the central flaws in our welfare system--our government pays people to work less or not at all. When income must be lower than a certain threshold to receive benefits such as Medicaid and food stamps, people face disincentives to work. A person is much less likely to climb the economic ladder when he has to leave so many benefits behind.
The Congressional Budget Office projects that the ACA will reduce labor supply (the amount people choose to work) by the equivalent of 2 to 2.5 million full-time workers. Part of this reduction, particularly for childless adults, is due to Medicaid expansion. A recent NBER working paper by Laura Dague, Thomas DeLeire, and Lindsey Leininger supports this projection: the authors estimate that public health insurance reduces labor supply among its beneficiaries by between 2.4 and 10.6 percentage points. If 12 million people gain Medicaid coverage under the ACA, employment could decline by between 288,000 and 1.3 million people.
Public spending on Medicaid exceeds $400 billion a year, making it the third-largest entitlement program after Social Security and Medicare. Those costs will only go up when more people enroll in the program under the ACA. And yet, the program still fails to improve physical health among its beneficiaries.