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The poverty-reducing effect of Medicaid


  • Sommers, Benjamin D.
  • Oellerich, Donald


Medicaid provides health insurance for 54 million Americans. Using the Census Bureau's Supplemental Poverty Measure (which subtracts out-of-pocket medical expenses from family resources), we estimated the impact of eliminating Medicaid. In our counterfactual, Medicaid beneficiaries would become uninsured or gain other insurance. Counterfactual medical expenditures were drawn stochastically from propensity-score-matched individuals without Medicaid. While this method captures the importance of risk protection, it likely underestimates Medicaid's impact due to unobserved differences between Medicaid and non-Medicaid individuals. Nonetheless, we find that Medicaid reduces out-of-pocket medical spending from $871 to $376 per beneficiary, and decreases poverty rates by 1.0% among children, 2.2% among disabled adults, and 0.7% among elderly individuals. When factoring in institutionalized populations, an additional 500,000 people were kept out of poverty. Overall, Medicaid kept at least 2.6 million—and as many as 3.4 million—out of poverty in 2010, making it the U.S.’s third largest anti-poverty program.

Suggested Citation

  • Sommers, Benjamin D. & Oellerich, Donald, 2013. "The poverty-reducing effect of Medicaid," Journal of Health Economics, Elsevier, vol. 32(5), pages 816-832.
  • Handle: RePEc:eee:jhecon:v:32:y:2013:i:5:p:816-832
    DOI: 10.1016/j.jhealeco.2013.06.005

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    References listed on IDEAS

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    Cited by:

    1. repec:bla:coecpo:v:35:y:2017:i:3:p:439-456 is not listed on IDEAS
    2. Boudreaux, Michel H. & Golberstein, Ezra & McAlpine, Donna D., 2016. "The long-term impacts of Medicaid exposure in early childhood: Evidence from the program's origin," Journal of Health Economics, Elsevier, vol. 45(C), pages 161-175.
    3. Richard V. Burkhauser & Jeff Larrimore & Sean Lyons, 2017. "Measuring Health Insurance Benefits: The Case Of People With Disabilities," Contemporary Economic Policy, Western Economic Association International, vol. 35(3), pages 439-456, July.
    4. Korenman, Sanders D. & Remler, Dahlia K., 2016. "Including health insurance in poverty measurement: The impact of Massachusetts health reform on poverty," Journal of Health Economics, Elsevier, vol. 50(C), pages 27-35.

    More about this item


    Medicaid; Health insurance; Poverty; Medical costs;

    JEL classification:

    • I13 - Health, Education, and Welfare - - Health - - - Health Insurance, Public and Private
    • I32 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - Measurement and Analysis of Poverty
    • I38 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - Government Programs; Provision and Effects of Welfare Programs
    • D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution


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