The Importance of Medicaid Expansion to Improve Children’s Health Insurance Rates

By Alisa Chester and Sarah Koslov

This week, two important studies confirmed our understanding that improving access to Medicaid and CHIP for children is a financially sound public investment that not only leads to greater health coverage rates but also results in increased college attendance, lower mortality rates, and higher earned wages. Together, the research points out that the long-term impact of Medicaid expansion will lead to higher rates of children’s health coverage as well as a positive return on government investments.

In 2008, Oregon expanded Medicaid for a random subset of low-income adults (the Oregon Experiment). This created a window for researchers to assess whether parents’ gaining health coverage leads to their children gaining health coverage. The authors of the paper Effect of Expanding Medicaid for Parents on Children’s Health Insurance Coverage found that children’s Medicaid and CHIP coverage increases when their parents applied for Medicaid.

Effectively, the study demonstrates a causal link between a parent’s access to Medicaid and their children’s health coverage status. The authors stress that “…expanding parental access to Medicaid coverage will have a positive impact on children’s public health insurance rates.” Simply put, children’s health insurance rates will increase when parents gain health coverage.

“Findings from this study suggest that one way to maximize Medicaid insurance for children is to ensure parents have the ability to obtain coverage….As more parents gain coverage, it is likely that children’s rates will also improve. To ensure that eligible children obtain coverage, states should participate in Medicaid expansions and other programs created by the Patient Protection and Affordable Care Act of 2010 to increase insurance options for parents and children.”

In Medicaid as an Investment in Children: What is the Long-Term Impact on Tax Receipts?, a somewhat more complicated study, the National Bureau of Economic Research investigated the long-term impact of Medicaid expansion and the State Children’s Health Insurance Program. Using administrative data from the IRS, researchers began with children born in the 1980s and tracked their academic, economic, and social progress through young adulthood—up to age 28.

The authors found that Medicaid eligibility statistically reduces future Earned Income Tax Credit (EITC) receipts in the future. In other words, children eligible for public health programs had higher incomes and therefore required fewer tax breaks and contributed greater dollar amounts in taxes than their counterparts. More importantly, these results suggest that, “Medicaid eligibility during childhood does not create a culture of dependency that leads to increased EITC receipt later in life.”

Medicaid eligible children, according to this study, are also more likely to attend college and have lower rates of mortality (e.g., greater life expectancies). These outcomes, as a result of increased Medicaid eligibility, may ultimately contribute to the tax and wage outcomes highlighted in the report.

“We find that by expanding Medicaid to children, the government recoups much of its investment over time in the form of higher future tax payments. Moreover, children exposed to Medicaid collect less money from the government in the form of the Earned Income Tax Credit, and the women have higher cumulative earnings by age 28. Aside from the positive return on the government investment, the eligible children themselves also experience decreases in mortality and increases in college attendance.”

Ultimately, these studies provide robust research and data that bolsters the argument for Medicaid and strongly suggests that expansion would only compound the successes documented in the past two decades. As we approach Medicaid’s 50th anniversary, its worthwhile to reflect on the progress made and look forward to ways that we can build on these achievements.