The Value of Medicaid: Interpreting Results from the Oregon Health Insurance Experiment

63 Pages Posted: 29 Jun 2015

See all articles by Amy Finkelstein

Amy Finkelstein

Massachusetts Institute of Technology (MIT) - Department of Economics; National Bureau of Economic Research (NBER)

Nathaniel Hendren

Harvard University - Department of Economics

Erzo F. P. Luttmer

Dartmouth College; National Bureau of Economic Research (NBER); IZA Institute of Labor Economics

Date Written: June 2015

Abstract

We develop a set of frameworks for valuing Medicaid and apply them to welfare analysis of the Oregon Health Insurance Experiment, a Medicaid expansion for low-income, uninsured adults that occurred via random assignment. Our baseline estimates of Medicaid's welfare benefit to recipients per dollar of government spending range from about $0.2 to $0.4, depending on the framework, with at least two-fifths – and as much as four-fifths – of the value of Medicaid coming from a transfer component, as opposed to its ability to move resources across states of the world. In addition, we estimate that Medicaid generates a substantial transfer, of about $0.6 per dollar of government spending, to the providers of implicit insurance for the low-income uninsured. The economic incidence of these transfers is critical for assessing the social value of providing Medicaid to low-income adults relative to alternative redistributive policies.

Suggested Citation

Finkelstein, Amy and Hendren, Nathaniel and Luttmer, Erzo F.P., The Value of Medicaid: Interpreting Results from the Oregon Health Insurance Experiment (June 2015). NBER Working Paper No. w21308. Available at SSRN: https://ssrn.com/abstract=2624435

Amy Finkelstein (Contact Author)

Massachusetts Institute of Technology (MIT) - Department of Economics ( email )

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Nathaniel Hendren

Harvard University - Department of Economics ( email )

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Erzo F.P. Luttmer

Dartmouth College ( email )

Department of Economics
Hanover, NH 03755
United States

National Bureau of Economic Research (NBER)

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IZA Institute of Labor Economics

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