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Stemming the Tide? The Effect of Expanding Medicaid Eligibility on Health Insurance Coverage

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  • Lara D. Shore-Sheppard

    (Princeton University)

Abstract

Federal legislation passed in the late 1980s greatly expanded the potential coverage of the Medicaid program. Whereas in 1985 Medicaid was essentially limited to mothers and children on AFDC, by the early 1990s eligibility was expanded to include all children born after 1983 in poor families, regardless of family structure or income sources. In this paper I evaluate the effects of these expansions on Medicaid coverage and overall health insurance coverage of low- income children. Growth in Medicaid enrollment between 1988 and 1993 is decomposed into three underlying sources: changes in the eligibility rules of the program; changes in the eligibility characteristics of the population; and changes in takeup among the eligible. I find that about 68 percent of the 6.7 percentage point rise in coverage rates is attributable to the expanded eligibility rules. While the expansion of Medicaid eligibility may have increased Medicaid enrollment, an important question is whether the increase represented a net gain in health insurance coverage, or a substitution from private to publicly-provided coverage. I employ between-state variation in the impact of the federally-mandated expansions to measure the potential "crowding out" of private health insurance by public insurance. I find little evidence of crowding out: instead, the Medicaid expansions seem to have maintained overall health insurance coverage rates against a backdrop of declining private coverage.

Suggested Citation

  • Lara D. Shore-Sheppard, 1996. "Stemming the Tide? The Effect of Expanding Medicaid Eligibility on Health Insurance Coverage," Working Papers 740, Princeton University, Department of Economics, Industrial Relations Section..
  • Handle: RePEc:pri:indrel:361
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    References listed on IDEAS

    as
    1. David Card & Andrew K.G. Hildreth & Lara D. Shore-Sheppard, 2004. "The Measurement of Medicaid Coverage in the SIPP: Evidence From a Comparison of Matched Records," Journal of Business & Economic Statistics, American Statistical Association, vol. 22, pages 410-420, October.
    2. Ham, John C. & Shore-Sheppard, Lara, 2005. "The effect of Medicaid expansions for low-income children on Medicaid participation and private insurance coverage: evidence from the SIPP," Journal of Public Economics, Elsevier, vol. 89(1), pages 57-83, January.
    3. David Card & Lara D. Shore-Sheppard, 2004. "Using Discontinuous Eligibility Rules to Identify the Effects of the Federal Medicaid Expansions on Low-Income Children," The Review of Economics and Statistics, MIT Press, vol. 86(3), pages 752-766, August.
    4. David M. Cutler & Jonathan Gruber, 1996. "Does Public Insurance Crowd out Private Insurance?," The Quarterly Journal of Economics, Oxford University Press, vol. 111(2), pages 391-430.
    5. Gruber, Jonathan & Simon, Kosali, 2008. "Crowd-out 10 years later: Have recent public insurance expansions crowded out private health insurance?," Journal of Health Economics, Elsevier, vol. 27(2), pages 201-217, March.
    6. Card, David, 1996. "The Effect of Unions on the Structure of Wages: A Longitudinal Analysis," Econometrica, Econometric Society, vol. 64(4), pages 957-979, July.
    7. Blumberg, Linda J. & Dubay, Lisa & Norton, Stephen A., 2000. "Did the Medicaid expansions for children displace private insurance? An analysis using the SIPP," Journal of Health Economics, Elsevier, vol. 19(1), pages 33-60, January.
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    Cited by:

    1. A. S. Yelowitz, "undated". "Public Policy and Health Care Choices of the Elderly: Evidence from the Medicare Buy-In Program," Institute for Research on Poverty Discussion Papers 1136-97, University of Wisconsin Institute for Research on Poverty.
    2. Henry S. Farber & Helen Levy, 1998. "Recent Trends in Employer-Sponsored Health Insurance Coverage: Are Bad Jobs Getting Worse?," Working Papers 781, Princeton University, Department of Economics, Industrial Relations Section..
    3. Rebecca M. Blank & David Card & Philip K. Robins, 1999. "Financial Incentives for Increasing Work and Income Among Low- Income Families," HEW 9902002, University Library of Munich, Germany.
    4. Hamersma, Sarah & Kim, Matthew, 2013. "Participation and crowd out: Assessing the effects of parental Medicaid expansions," Journal of Health Economics, Elsevier, vol. 32(1), pages 160-171.
    5. Wagner, Kathryn L., 2015. "Medicaid expansions for the working age disabled: Revisiting the crowd-out of private health insurance," Journal of Health Economics, Elsevier, vol. 40(C), pages 69-82.
    6. Freedman, Seth & Lin, Haizhen & Simon, Kosali, 2015. "Public health insurance expansions and hospital technology adoption," Journal of Public Economics, Elsevier, vol. 121(C), pages 117-131.
    7. Farber, Henry S. & Levy, Helen, 2000. "Recent trends in employer-sponsored health insurance coverage: are bad jobs getting worse?," Journal of Health Economics, Elsevier, vol. 19(1), pages 93-119, January.
    8. Aaron S. Yelowitz, 1998. "Will Extending Medicaid to Two-Parent Families Encourage Marriage?," Journal of Human Resources, University of Wisconsin Press, vol. 33(4), pages 833-865.
    9. A. S. Yelowitz, "undated". "Did recent medicaid reforms cause the caseload explosion in the food stamp program?," Institute for Research on Poverty Discussion Papers 1109-96, University of Wisconsin Institute for Research on Poverty.
    10. Thompson, Owen, 2017. "The long-term health impacts of Medicaid and CHIP," Journal of Health Economics, Elsevier, vol. 51(C), pages 26-40.
    11. Henry S. Farber & Helen Levy, 1998. "Recent Trends in Employer-Sponsored Health Insurance Coverage: Are Bad Jobs Getting Worse?," Working Papers 781, Princeton University, Department of Economics, Industrial Relations Section..
    12. Janet Currie, 2000. "Do Children of Immigrants Make Differential Use of Public Health Insurance?," NBER Chapters,in: Issues in the Economics of Immigration, pages 271-308 National Bureau of Economic Research, Inc.
    13. Maury Gittleman, 2011. "Medicaid and Wealth: An Examination Using the NLSY79," Working Papers 448, U.S. Bureau of Labor Statistics.
    14. Dhaval Dave & Sandra L. Decker & Robert Kaestner & Kosali I. Simon, 2015. "The Effect of Medicaid Expansions in the Late 1980s and Early 1990s on the Labor Supply of Pregnant Women," American Journal of Health Economics, MIT Press, vol. 1(2), pages 165-193, Spring.
    15. Heinrich, Carolyn J. & Brill, Robert, 2015. "Stopped in the Name of the Law: Administrative Burden and its Implications for Cash Transfer Program Effectiveness," World Development, Elsevier, vol. 72(C), pages 277-295.
    16. Janet Currie & Aaron Yelowitz, 1999. "Health Insurance and Less Skilled Workers," NBER Working Papers 7291, National Bureau of Economic Research, Inc.
    17. Thomas Buchmueller & John C. Ham & Lara D. Shore-Sheppard, 2015. "The Medicaid Program," NBER Chapters,in: Economics of Means-Tested Transfer Programs in the United States, Volume 1, pages 21-136 National Bureau of Economic Research, Inc.
    18. Azuara, Oliver & Marinescu, Ioana, 2013. "Informality and the expansion of social protection programs: Evidence from Mexico," Journal of Health Economics, Elsevier, vol. 32(5), pages 938-950.
    19. R. Vincent Pohl, 2018. "Medicaid And The Labor Supply Of Single Mothers: Implications For Health Care Reform," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 59(3), pages 1283-1313, August.
    20. Wagner, Kathryn L., 2016. "Shock, but no shift: Hospitals' responses to changes in patient insurance mix," Journal of Health Economics, Elsevier, vol. 49(C), pages 46-58.
    21. Bronchetti, Erin Todd, 2014. "Public insurance expansions and the health of immigrant and native children," Journal of Public Economics, Elsevier, vol. 120(C), pages 205-219.
    22. Esel Y. Yazici & Robert Kaestner, 1998. "Medicaid Expansions and The Crowding Out of Private Health Insurance," NBER Working Papers 6527, National Bureau of Economic Research, Inc.

    More about this item

    Keywords

    Medicaid; health insurance coverage for children;

    JEL classification:

    • E1 - Macroeconomics and Monetary Economics - - General Aggregative Models
    • E10 - Macroeconomics and Monetary Economics - - General Aggregative Models - - - General

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