The Effects of Expanding Medicaid Eligibility on the Distribution of Children's Health Insurance Coverage

Federal legislation passed in the late 1980s greatly expanded the potential coverage of the Medicaid program to include children in families with incomes at and slightly above the poverty threshold, including families with two parents and working parents. Prior to these expansions, the distribution of health insurance coverage in the population of children was distinctly U-shaped, with children in the second and third income deciles having the lowest levels of coverage. In this paper I evaluate the impact of the expansions on the distribution of coverage both by income class and by region. I find that the expansions served to reduce the variation in insurance coverage, raising coverage levels substantially for low-income children and children in historically low- coverage regions. Using the fact that the impact of the legislation varied regionally and by income decile, I explore whether the fall in private coverage that occurred in the late 1980s and early 1990s could be attributed to the expansions. I conclude that the decline in private coverage was unlikely to have arisen as a result of the expansions.