Medicaid confers long-term benefits

The National Bureau of Economic Research released a working paper on the long-term effects of Medicaid expansion in the 1980s and 1990s on income, college attendance, mortality rate and tax receipts.

The study comes as a number of states — including North Carolina — are reconsidering expanding their Medicaid programs.


The working paper said Medicaid helps pay for itself in the long run:

  • For every year until age 28 that people qualified for Medicaid, their individual tax payments increased by $247
  • Both genders relied less on the Earned Income Tax Credit — $109 less for women, $41 less for men.
  • The study projects that up to 56 percent of Medicaid investments will be paid back.

Its authors used tax records to track children born between 1981 and 1984, but instead of evaluating the early effects of Medicaid coverage for children, the study observed the effects in early adulthood.

Amanda Kowalski, co-author of the report and a Yale University economics professor, said they found that for every dollar the government spent on providing Medicaid to children, it recovered 14 cents by the time those children reached age 28.

“This study shows that previous expansions in Medicaid eligibility to children have led to higher tax payments in the long term,” she said.

Kowalski said using future income-tax payments, the government can recoup up to 56 percent of its costs by the time the children reach retirement age.

Adam Linker, co-director of the left-leaning N.C. Justice Center’s health care project, said in an email that Medicaid has a positive impact on low-income families lives, which this report reinforces.

“In the 1990s Medicaid coverage expanded to more children and pregnant women in response to studies showing North Carolina had one of the nation’s highest infant mortality rates,” he said.

It is uncertain how or if this study will affect the conversation surrounding the Affordable Care Act.

“Many things have changed since the expansions that we studied,” Kowalski said. “It is hard to know if these findings will generalize to the expansion of Medicaid through the Affordable Care Act because expansions in Medicaid through the Affordable Care Act will affect adults as well as children.”

The report also found that children who were in the Medicaid program were less reliant on Earned Income Tax Credit — a tax credit targeted to lower-income workers — as adults, attended college at higher rates and had a lower mortality rate.

Both genders, especially women, made more money by age 28 if they were covered by Medicaid.

Kowalski said women’s increased career earnings were likely a result of higher college participation rates.

Pam Silberman, professor at the UNC Gillings School of Global Public Health, said Medicaid’s family planning services are particularly responsible for this effect.

“That probably delayed unwanted births, so they may have had fewer births or they may have started having children later,” Silberman said.

She said preventive health care services given to children increased college attendance for both sexes.

“If you’re healthy, you miss less days in school. And if you miss less days in school, your educational outcomes are going to be better.”

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