Early Investment in Child Health Yields Positive Results

Yale health economist Amanda Kowalski’s new NBER paper finds that children who receive Medicaid benefits are less likely to die prematurely in adulthood and more likely to go to college. The study,  “Medicaid as an Investment in Children: What is the Long-­‐Term Impact on Tax Receipts?” also shows that when these children grow up they make a higher income and contribute more to the tax system.

Kowalski, along with her co-authors David Brown and Ithai Lurie from the Office of Tax Analysis at the U.S. Department of the Treasury, used data from the IRS to calculate Medicaid insurance eligibiity from the cohort of children born between 1981-84 who were affected by the Medicaid expansions and CHIP in their states.

The study followed these children and found that by the age of 28, the federal government recouped 14 cents for every dollar and projected that by the time this cohort is 60, the government could recoup up to 56 cents for every dollar spent on them as children.

“Although it will take years to know the long-term impact of current expansions of Medicaid undertaken as part of the Affordable Care Act, this study shows that the investments that the government made in Medicaid in the 1980s and 1990s are paying off in the form of higher tax payments now,” Kowalski said.

NBER paper available here.

VOX covers the study here and Upshot here.

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