The Effect of Health Insurance on Crime: Evidence from the Affordable Care Act Medicaid Expansion

Abstract

Little evidence exists on the Affordable Care Act (ACA) on criminal behavior, a gap in the literature that this paper seeks to address. Using a one period static model of criminal behavior, I argue we should anticipate a decrease in time devoted to criminal activities in response to the expansion, since the availability of public health insurance not only has a pure negative income effect on crime but also raises the opportunity cost of crime. This prediction is particularly relevant for the ACA expansion, because it primarily affects childless adults, the population that is most likely to engage in criminal behavior. I validate this forecast using a difference-in-differences approach, estimating the expansion’s effects on a panel dataset of state- and county-level crime rates. My point estimates show that the ACA Medicaid expansion is negatively related to burglary, motor vehicle theft, criminal homicide, robbery, and aggravated assault. The value of this Medicaid expansion induced reduction in crime to expansion states is almost $10 billion per year.

Keywords: Health Insurance, The Affordable Care Act (ACA) Medicaid Expansion, Criminal Behavior

JEL Classification: I13, K14, K42