Research Update: Medicaid Pulls Americans Out Of Poverty

November 20, 2017 Karina Wagnerman

This week, I am reading a study on one of my favorite topics: the poverty rate. In 2016, about 13% of the population lived in poverty. When broken out by age, children continue to have the highest poverty rate (18% under age 18, 12% ages 18 to 64, and 9% 65 and over). Children represent 23% of the population, but 33% of the population living in poverty. Children and families are struggling – how does Medicaid help them?

Health Affairs: Estimating The Effects Of Health Insurance And Other Social Programs On Poverty Under The Affordable Care Act

The authors developed the first health-inclusive poverty measure that factors in both the need for health insurance and the value of health benefits as resources to meet that need. They compare the impacts of different health insurance programs to non-health programs, such as social insurance, means-tested cash, and in-kind benefits and refundable tax credits. They examine the population under age 65.

What it finds

Medicaid is among the most effective antipoverty programs. Medicaid reduced the health inclusive poverty measure by 3.8 percentage points. This is comparable to the combined effect of all social insurance programs and greater than the effects of means-tested benefits and refundable tax credits. (See Exhibit 2 copied at the bottom.)
Medicaid had a larger effect on child poverty than all non-health means tested benefits combined. It is estimated to reduce child poverty by 5.3 percentage points.
Medicaid is particularly important for people of color. It reduced the poverty rates of Hispanics by 6.1 percentage points and African Americans by 4.9 percentage points (in households with no disability recipients).
Health insurance benefits are important to families who receive them. Medicaid reduced poverty among its beneficiaries by 17.1 percentage points. This is higher than other types of insurance: ESI reduced poverty by 5 percentage points for those it covered and premium subsidies reduced poverty by 6.6 percentage points for those it covered.

Why it matters

Public health insurance benefits (Medicaid, Medicare, and premium subsidies) are among the most important antipoverty programs. They account for almost one-third of the poverty reduction from public benefits for individuals in households without a disability recipient.
Though the standard measure of poverty may not show it, losing health insurance could throw many families into deep economic insecurity.