Working Paper: NBER ID: w22899
Authors: Andrew Goodman-Bacon
Abstract: This paper exploits the original introduction of Medicaid (1966-1970) and the federal mandate that states cover all cash welfare recipients to estimate the effect of childhood Medicaid eligibility on adult health, labor supply, program participation, and income. Cohorts born closer to Medicaid implementation and in states with higher pre-existing welfare-based eligibility accumulated more Medicaid eligibility in childhood but did not differ on a range of other health, socioeconomic, and policy characteristics. Early childhood Medicaid eligibility reduces mortality and disability and, for whites, increases extensive margin labor supply, and reduces receipt of disability transfer programs and public health insurance up to 50 years later. Total income does not change because earnings replace disability benefits. The government earns a discounted annual return of between 2 and 7 percent on the original cost of childhood coverage for these cohorts, most of which comes from lower cash transfer payments.
Keywords: Medicaid; Health Outcomes; Labor Supply; Income; Public Policy
JEL Codes: I13; J10; N32
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Medicaid eligibility (I18) | improved health outcomes (I14) |
| improved health outcomes (I14) | reduced mortality and disability (I12) |
| reduced mortality and disability (I12) | increased employment (J68) |
| reduced mortality and disability (I12) | reduced reliance on disability benefits and public health insurance (I39) |
| Medicaid eligibility (I18) | reduced mortality rates (I14) |
| government earning a return from childhood coverage (H51) | reduced cash transfer payments and increased tax revenue (H29) |