The long-term effects of exposure to medicaid in early childhood

Abstract

This project investigates the long-term effects of exposure to Medicaid in early childhood on adult health and economic status by leveraging the program's gradual adoption across the states. The staggered timing of Medicaid's introduction created variation in cumulative exposure to Medicaid for birth cohorts that are now in adulthood. I use this natural experiment in a generalized difference-in-differences framework that is complemented by a rich set of state-by-year and county-by-year controls that measure changes in public spending on the poor and health care supply. I demonstrate further support for the study design by comparing Medicaid's impact in groups that were targeted by the program versus groups that had a low probability of being eligible for benefits. I first examine the impact of Medicaid's introduction on short-run measures of utilization and infant health to establish that the program had short-term effects that could have persisted over time. Using data from the National Health Interview Survey I find that Medicaid increased the probability of any annual hospital stay by approximately 3 percentages points among low-income children under 6. Data from the National Natality Survey suggests that the program reduced the incidence of low-birth weight in the low-income population by 4 percentage points. Both findings provide evidence that the introduction of Medicaid created meaningful short-run benefits that could have persisted over time. To examine the program's long-term impacts I use data from the Panel Study of Income Dynamics. Results suggest that in subgroups targeted by the program, exposure to Medicaid in childhood (age 0-5) is associated with statistically significant and meaningful improvements in adult health (age 18-54). I find no evidence for an economic effect, but the point estimates are imprecise and the findings are inconclusive. I discuss the significance of my results in the context of a dynamic model of child development that interacts with an evolving U.S. health system.