Medicaid
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Return on investment: Medicaid’s impact on kids

January 29, 2021
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INTRODUCTION

The biennial budget is perhaps the most comprehensive and consequential policy document in Ohio state government. During the budget process, lawmakers must balance the state’s policy goals against the realities of limited resources and competing needs. With the economic and health impacts of COVID-19, an incoming Biden administration and Democratic majority in Congress, Ohio’s 134th General Assembly will face tough choices as members manage the new political and policy landscapes of the 2021 budget cycle.

 Medicaid plays a central role as a source of coverage for 1 in 4 Ohioans.

Representing more than 40 percent of the budget, Medicaid plays a central role as a source of coverage for 1 in 4 Ohioans. It is also a key financial tool to make the budget whole and a critical foundation for Ohio’s economy. But for all the investment, what is the return on that investment (ROI)? Does Medicaid improve health outcomes, lower costs and create better economic opportunities for enrollees?  

While we have looked into these questions around rural communities and how Medicaid supports the state budget, we have not examined how Medicaid can produce returns in regards to children. This piece does so by examining relevant evidence-based literature and putting forward empirical data therein for policymakers, advocates and media members to consider.  

Findings from the literature are summarized below. Additionally, detail is provided by research paper in tables with categories that define the ROI of Medicaid coverage for children.

FINDINGS

1: Produces Better Health Outcomes  

The literature provides evidence of significant improvement in outcomes in a number of ways. Children who are covered early in life are more likely to use preventive care and are healthier as adults. This means they have better outcomes associated with chronic diseases, immunity disorders and mortality. Interestingly, Medicaid coverage also yields better intergenerational health for children born to individuals covered by the program in early life.  

2: Lowers Costs Inside and Outside of Health Care  

Children covered by Medicaid are not only less likely to suffer from expensive chronic diseases later in life, they are also less likely to be hospitalized. However, the positive economic impacts are not just relegated to health spending. When children have access to Medicaid coverage, they are less likely to need Social Security Disability Income and less likely to collect Earned Income Tax Credit (EITC) payments.  

3: Increases Economic Mobility  

Not only does coverage improve the ability of children born into poverty to escape the cycle of poverty, it also has been shown to reduce economic racial disparities. This is not only represented by higher earnings later in life, but also through better educational outcomes, including higher completion rates for high school and college. Beyond the direct impact, Medicaid also enables households to be more financially secure, with access to Medicaid coverage resulting in less debt, generally.  

 

[1] Wherry, L. R., Miller, S., Kaestner, R., & Meyer, B. D. (2018). Childhood Medicaid Coverage and Later-Life Health Care Utilization. Review of Economics & Statistics, 100(2), 287–302.  

[2] Cohodes, S. R., Kleiner, S. A., Lovenheim, M., & Grossman, D. S. (2014). The effect of child health insurance access on schooling : evidence from public insurance expansions. National Bureau of Economic Research.  

[3] Miller, S., & Wherry, L. R. (2019). The Long-Term Effects of Early Life Medicaid Coverage. Journal of Human Resources, 54(3), 785–824.  

[4] Boudreaux, M. H., Golberstein, E., & McAlpine, D. D. (2016). The long-term impacts of Medicaid exposure in early childhood: Evidence from the program’s origin. Journal of Health Economics, 45, 161–175.  

[5] O’Brien Rourke L., & Robertson Cassandra L. (2018). Early-life Medicaid Coverage and Intergenerational Economic Mobility. Journal of Health and Social Behavior, 59(2), 300–315.  

[6] Brown, D. W., Kowalski, A. E., & Lurie, I. Z. (2015). Medicaid as an investment in children: what is the long-term impact on tax receipts? National Bureau of Economic Research.  

[7] Levere, M., Orzol, S., Leininger, L., & Early, N. (2019). Contemporaneous and Long-Term Effects of Children’s Public Health Insurance Expansions on Supplemental Security Income Participation. Journal of Health Economics, 64, 80–92.  

[8] Wherry, L. R., Miller, S., Kaestner, R., & Meyer, B. D. (2018). Childhood Medicaid Coverage and Later-Life Health Care Utilization. Review of Economics & Statistics, 100(2), 287–302.  

[9] East, C. N., Miller, S., Page, M. E., & Wherry, L. R. (2017). Multi-generational impacts of childhood access to the safety net : early life exposure to Medicaid and the next generation’s health. National Bureau of Economic Research.

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