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The Value of Medicaid: Interpreting Results from the Oregon Health Insurance Experiment

Author

Listed:
  • Amy Finkelstein
  • Nathaniel Hendren
  • Erzo F.P. Luttmer

Abstract

We develop a set of frameworks for valuing Medicaid and apply them to welfare analysis of the Oregon Health Insurance Experiment, a Medicaid expansion for low-income, uninsured adults that occurred via random assignment. Our baseline estimates of Medicaid's welfare benefit to recipients per dollar of government spending range from about $0.2 to $0.4, depending on the framework, with at least two-fifths – and as much as four-fifths – of the value of Medicaid coming from a transfer component, as opposed to its ability to move resources across states of the world. In addition, we estimate that Medicaid generates a substantial transfer, of about $0.6 per dollar of government spending, to the providers of implicit insurance for the low-income uninsured. The economic incidence of these transfers is critical for assessing the social value of providing Medicaid to low-income adults relative to alternative redistributive policies.

Suggested Citation

  • Amy Finkelstein & Nathaniel Hendren & Erzo F.P. Luttmer, 2015. "The Value of Medicaid: Interpreting Results from the Oregon Health Insurance Experiment," NBER Working Papers 21308, National Bureau of Economic Research, Inc.
  • Handle: RePEc:nbr:nberwo:21308
    Note: AG HC PE
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    JEL classification:

    • H51 - Public Economics - - National Government Expenditures and Related Policies - - - Government Expenditures and Health
    • I13 - Health, Education, and Welfare - - Health - - - Health Insurance, Public and Private

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