Panel Paper: The Long-Run Effect of Medicaid on Receipt of Public Assistance

Thursday, November 7, 2019
I.M Pei Tower: Majestic Level, Majestic Ballroom (Sheraton Denver Downtown)

*Names in bold indicate Presenter

William L. Schpero, Cornell University and Chima D. Ndumele, Yale University

State and federal policymakers have articulated concerns about the budgetary implications of expansions of Medicaid eligibility, arguing that investments in Medicaid may crowd-out investment in other priority services (e.g., education) and could induce “benefit lock,” whereby recipients of Medicaid become dependent on the program and other forms of public assistance in the long-run. In this study, we examined the long-run effect of receiving Medicaid as a child on the receipt of means-tested public assistance in adulthood. We conducted a quasi-experimental regression discontinuity analysis, comparing receipt of public assistance by individuals born before and after September 30, 1983; children born after benefited from significantly more years of Medicaid eligibility than those born before, principally due to the Omnibus Reconciliation Act of 1990. We found that the increase in Medicaid eligibility in childhood was not associated with significant changes in receipt of medical, cash, or non-cash public assistance at ages 18-25 or 26-31, providing no evidence of induced welfare dependency. At most, subgroups exposed to the greatest increases in Medicaid eligibility exhibited later life decreases in non-cash assistance on the order of 2 to 3 percentage points.