The Effect of Medicaid on Children's Health: A Regression Discontinuity Approach

In this paper I estimate the impact of Medicaid on children's health care utilization and their subsequent health outcomes. I estimate the causal effects using a Regression Discontinuity (RD) design. I exploit the discontinuity generated by Medicaid's eligibility rule, based on family income, on program participation rates. In contrast with a standard regression discontinuity approach, here there are multiple eligibility thresholds that vary across states. This feature allows me to estimate heterogeneous effects of the program at different income thresholds. Using data from the Panel Study of Income Dynamics (PSID) and its Child Development Study (CDS) supplement, I nd that the effects of Medicaid on measures of children's health are heterogeneous depending on the family income level. Negative impacts of Medicaid are generally observed for children of higher-income families ô€€€between 185% and 250% of the poverty line, while generally null or positive effects are observed for poorer children í¯€family income between 100% and 185% of the poverty line. A possible explanation for the heterogeneous impacts is the di erential e ect of Medicaid on preventive health care utilization. While I nd that Medicaid increases the use of preventive medical care among children with low family income, no signifcant e ects are observed among those with higher income. Another likely explanation for the observed e ects is that Medicaid induces higher-income families to drop private health insurance with access to better quality of health care, generating a negative e ect on children's health outcomes.