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The Effect of Medicaid Expansions for Low-Income Children on Medicaid Participation and Insurance Coverage: Evidence from the SIPP

  • John Ham
  • Lara Dawn Shore-Sheppard

The committment to public health insurance for children has increased in recent years, leading to two potentially contradictory concerns for public policy: that expanded availability of public insurance may lead families to decline private insurance for their children and that the additional public coverage may not reach many children without insurance. We use data from the 1987-1993 Surveys of Income and Program Participation and static dynamic discrete panel data models to examine these two concerns. Using static models we find that the expansions resulted in increased Medicaid coverage, although the estimates of take-up among eligible children are smaller than estimates from previous research. We find little evidence of a negative relationship of any significant magnitude between eligibility for Medicaid and private coverage. We also allow the effect of eligibility to differ for children who have just become eligible and children who have been eligible for several months. We find that children who have been eligible for Medicaid longer are more likely to be enrolled in Medicaid, but are no more likely to have lost private coverage. Including individual fixed effects reduces the magnitude of the estimated take-up effect, while the fixed effects estimates for the private insurance regression become negative and marginally statistically significant in some specifications. Using simple dynamic models of insurance choice, we find that insurance choice is quite persistent. The estimated long run impact of eligibility in the dynamic models is somewhat larger than the estimate from the static models, while the immediate impact of expanded Medicaid eligibility from the dynamic models is smaller than the estimated effect from the static models.

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Paper provided by Northwestern University/University of Chicago Joint Center for Poverty Research in its series JCPR Working Papers with number 164.

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Date of creation: 17 Mar 2000
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Handle: RePEc:wop:jopovw:164
Contact details of provider: Postal: Harris Graduate School of Public Policy Studies, 1155 E. 60th Street Chicago, IL 60637
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  1. Currie, Janet & Gruber, Jonathan, 1996. "Health Insurance Eligibility, Utilization of Medical Care, and Child Health," The Quarterly Journal of Economics, MIT Press, vol. 111(2), pages 431-66, May.
  2. Dean R. Hyslop, 1999. "State Dependence, Serial Correlation and Heterogeneity in Intertemporal Labor Force Participation of Married Women," Econometrica, Econometric Society, vol. 67(6), pages 1255-1294, November.
  3. Cutler, David M & Gruber, Jonathan, 1996. "Does Public Insurance Crowd Out Private Insurance?," The Quarterly Journal of Economics, MIT Press, vol. 111(2), pages 391-430, May.
  4. Lara D. Shore-Sheppard, 2005. "Stemming the Tide? The Effect of Expanding Medicaid Eligibility on Health Insurance," NBER Working Papers 11091, National Bureau of Economic Research, Inc.
  5. 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.
  6. Nickell, Stephen J, 1981. "Biases in Dynamic Models with Fixed Effects," Econometrica, Econometric Society, vol. 49(6), pages 1417-26, November.
  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.
  8. Michael P. Keane & Kenneth I. Wolpin, 2002. "Estimating Welfare Effects Consistent with Forward-Looking Behavior. Part II: Empirical Results," Journal of Human Resources, University of Wisconsin Press, vol. 37(3), pages 600-622.
  9. James J. Heckman & Thomas E. MaCurdy, 1985. "A Simultaneous Equations Linear Probability Model," Canadian Journal of Economics, Canadian Economics Association, vol. 18(1), pages 28-37, February.
  10. Arellano, Manuel & Bond, Stephen, 1991. "Some Tests of Specification for Panel Data: Monte Carlo Evidence and an Application to Employment Equations," Review of Economic Studies, Wiley Blackwell, vol. 58(2), pages 277-97, April.
  11. Browning, Martin & Deaton, Angus & Irish, Margaret, 1985. "A Profitable Approach to Labor Supply and Commodity Demands over the Life-Cycle," Econometrica, Econometric Society, vol. 53(3), pages 503-43, May.
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