Working Paper: NBER ID: w21308
Authors: Amy Finkelstein; Nathaniel Hendren; Erzo FP Luttmer
Abstract: We develop a set of frameworks for valuing Medicaid and apply them to welfare analysis of the Oregon Health Insurance Experiment, a Medicaid expansion for low-income, uninsured adults that occurred via random assignment. Our baseline estimates of Medicaid's welfare benefit to recipients per dollar of government spending range from about $0.2 to $0.4, depending on the framework, with at least two-fifths – and as much as four-fifths – of the value of Medicaid coming from a transfer component, as opposed to its ability to move resources across states of the world. In addition, we estimate that Medicaid generates a substantial transfer, of about $0.6 per dollar of government spending, to the providers of implicit insurance for the low-income uninsured. The economic incidence of these transfers is critical for assessing the social value of providing Medicaid to low-income adults relative to alternative redistributive policies.
Keywords: Medicaid; Welfare Analysis; Oregon Health Insurance Experiment
JEL Codes: H51; I13
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Medicaid transfers (I18) | insurance providers (G52) |
| Medicaid value (I18) | transfer component (F16) |
| Medicaid enrollment (I18) | welfare benefits (I38) |