Effects of welfare reform and the state children’s health insurance program on medicaid and total health expenditures
AbstractMedicaid expenditures account for a sizeable proportion of U.S. GDP - $360.3 billion in 2009 or 2.55 percent of GDP. Despite this, the Affordable Care Act of 2010 (i.e. the new Obama healthcare initiative) further expands eligibility criteria for the Medicaid program. However, there is little literature on the effect on healthcare spending from earlier expansions of Medicaid such as the introduction of the SCHIP program. Moreover, the effect of welfare reform (i.e. Personal Responsibility and Work Opportunity Reconciliation Act of 1996) on Medicaid spending has received little attention. Using panel data from all 50 U.S. states for the period 1990-2004, we find that adding one person to the SCHIP rolls in a state that has established an SCHIP program in Medicaid raises real Medicaid spending about $4,100. However, we find evidence that additional SCHIP enrollments also affect non-Medicaid health spending. Thus, the total costs of insuring these patients are significantly higher (about $7,700). For states that have established Medicaid-combined programs, adding one person to the SCHIP rolls raises real healthcare spending about $1,800 after two years. Finally, we find that welfare reform reduced annual Medicaid expenditures by about $1.2 billion and total healthcare spending by about $2.5 billion.
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Bibliographic InfoPaper provided by University Library of Munich, Germany in its series MPRA Paper with number 36486.
Date of creation: 20 Dec 2011
Date of revision:
Healthcare costs; Medicaid; SCHIP; Welfare Reform;
Find related papers by JEL classification:
- I18 - Health, Education, and Welfare - - Health - - - Government Policy; Regulation; Public Health
- I38 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - Government Programs; Provision and Effects of Welfare Programs
- I00 - Health, Education, and Welfare - - General - - - General
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