Effect of Insurance on Infant Health: A Case Study of Low-Income Women in New Jersey

There have been relatively few evaluations of the effect of private insurance and Medicaid on infant health, and results from previous studies are inconclusive. The objective of this study if to estimate the effect of private insurance coverage and Medicaid participation on birth weight and the incidence of low-birth weight controlling for non-random selection of insurance status. Our data consist of vital records that have been linked to hospital discharge records and Medicaid claims for all births to women in New Jersey in the years 1989 and 1990. We use ordinary least squares regression and instrumental variables procedures to obtain estimates of the effect of insurance status on birth weight. We limit our analysis to low-income women as this is the population most at risk of an adverse birth outcome and the target of Medicaid. The results indicate that Medicaid has a small effect on the incidence of low-birth weight for black women, but has little effect on average birth weight for low-income women. Our preferred estimates suggest that Medicaid participation reduces the incidence of low-birth weight for black women by between 5 and 10 percent. A similar finding was found with regard to private insurance. Private insurance had little effect on average birth weight for both black and white women, and reduced the incidence of low-birth weight for black and white women by between 15 and 25 percent.