Panel Paper: Trends in the Distribution of Transfer Benefits to the Low-Income Population: Medicaid and Post Great Recession

Saturday, November 5, 2016 : 4:10 PM
Northwest (Washington Hilton)

*Names in bold indicate Presenter

Gwyn C Pauley, University of Southern California and Robert Moffitt, Johns Hopkins University
Recent research on the distribution of transfer benefits to the U.S. low income population has shown two things.  First, over the 20 years prior to the Great Recession, aggregate real benefits increased, but there was a redistribution away from non-elderly non-disabled families to the elderly and disabled and a redistribution away from the poorest families.  Second, these trends stopped during the Great Recession, when aggregate transfers again rose but all groups received increased transfers.  This paper pushes this literature toward in two ways.  First, previous calculations of trends in benefit distribution did not include Medicaid, even though benefits for some eligible groups were concentrated to those with the lowest incomes. Medicaid eligibility depends on both income and family structure, and has changed dramatically in several states in recent years, both over the 1980s-2000s, as well as in the recent ACA. Including Medicaid could thus change the picture of trends in transfer distribution.  The data difficulty is how to know, on an individual family basis, how much government Medicaid expenditure was received. We use the Medical Expenditure Panel Survey (MEPS), which includes such data, to calculate Medicaid payments for different family structures and pre-transfer income.  Preliminary findings suggest that the value of Medicaid transfers increased for all non-elderly, non-disabled families from 2009 to 2013 by about 18%.  However, we find that these increases were substantially larger for childless families, who saw an increase of about 31% during this time period.  While the values of Medicaid transfers have been increasing, they are still much smaller for childless families than they are for other families, especially compared to single parent families.  We also show how Medicaid affected the benefit and income distribution in states that chose to expand Medicaid and those that did not.  The second contribution of this paper is to determine whether the halt to the long-term redistribution that occurred during the Great Recession has ended and whether the long-term trends in redistribution have reasserted themselves.  Using data through 2013, a full 4 years after the official end of the Recession, we show that transfers to the non-elderly non-disabled peaked in 2009 and have fallen steadily since.  However, when Medicaid is included, we find that transfers have actually continued to increase since 2009.  Further, we find that transfers to poor familiesthose with private incomes between 50 and 100% of the federal poverty line (FPL), have remained steady since 2009.  This is in contrast to the fact that transfers to very-poor, families with private incomes less than 50% of the FPLdecreased by about 20% during this time period.  When Medicaid is included, we find that the very-poor saw a decrease of 6% while poor families saw an increase of 7%.  We show how means tested transfers changed each year for non-elderly, non-disabled families and further show transfers for five subgroups including single parent, two parent, and childless families, as well as employed and non-employed families.  We also show which programs were responsible for the changes in transfers.