Medicaid provides health insurance for millions of America’s most vulnerable people. In 2015, it covered 40 percent of all children at a cost of roughly $90 billion. Some have worried that this price tag is too high.
But in a paper in the American Economic Review , author Andrew Goodman-Bacon asserts that Medicaid coverage for children has more than paid for itself in the long run.
Goodman-Bacon found that Medicaid eligibility in early childhood reduced mortality and disability and increased employment up to 50 years later. As a result, young children in the 1960s and 1970s, who grew up with Medicaid, became healthier adults who paid more work-related taxes and relied less on welfare.
Minorities were likely to see long-run benefits from childhood insurance coverage, as shown in Panel B of Figure 6 from the paper.
The x-axis in the figure marks an individual's birth year relative to the introduction of Medicaid, which is indicated by the vertical line at zero. Cohorts born closer to the introduction of Medicaid were potentially covered for a longer portion of their childhood.