Association for Public Policy Analysis & Management

It is widely believed, with little evidence to support this belief, that health insurance and greater access to care improves the educational outcomes of children. This perception carries significant policy interest for the Medicaid eligible population, since it is often assumed children in low-income households are at risk for adverse health events and chronic illnesses as well as lower scholastic achievement. I use data from the National Assessment of Educational Progress and a quasi-experimental research design to obtain estimates of the effect of Medicaid eligibility expansions in the early and late 1990s on test scores of 4^th and 8^th graders in a nationally representative sample. The data are used in a novel format not exploited by past literature, and sheds new light on the impact of public insurance eligibility on education outcomes. I find that a doubling of the state Medicaid eligibility generosity significantly improves test scores by 5 percentage points (10% from the baseline) for 8^th graders and 4 percentage points (8.7%) for 4^th graders. These effects are larger for children in low-income schools, males in 4^th grade and females in 8^th grade – subgroups characterized with higher rates of chronic illness in the National Health Interview Survey (NHIS). A preliminary analysis of the NHIS indicates that Medicaid eligibility does not have an impact on school attendance – however, families experience lower out-of-pocket health expenditures and children are more likely to see a doctor and make an office visit. This suggests that financial savings and improved health are potential mechanisms through which Medicaid improves cognitive functioning.