Association for Public Policy Analysis & Management

The purpose of health insurance is to improve access to health care and protect families financially against negative health shocks. This paper employs a regression discontinuity (RD) design to examine whether publicly offered health insurance through the Medicaid program promotes greater and more efficient health care utilization, as well as financial security. Using data from the Survey of Income Program Participation (SIPP), I estimate the causal effect of Medicaid eligibility for children on measures of family financial well-being, including family savings, net worth, and ability to make housing payments. I also estimate the impact of Medicaid eligibility for children on their use of health care goods and services. The RD approach exploits multiple thresholds that arise from variation across states in the income eligibility rules for Medicaid. I find that Medicaid eligibility for children increases health care utilization and improves family financial well-being, as evidenced by higher savings, larger family net worth, and less delinquency in rent and mortgage payments, particularly among middle-income families. The results suggest that public health insurance has significant financial impacts for these families beyond increased access to health care.