Medicaid as an Investment in Children: What is the Long-Term Impact on Tax Receipts?

39 Pages Posted: 13 Jan 2015

See all articles by David Brown

David Brown

U.S. Department of the Treasury, Office of Tax Analysis (OTA)

Amanda Kowalski

University of Michigan at Ann Arbor - Department of Economics

Ithai Lurie

U.S. Department of the Treasury, Office of Tax Analysis (OTA)

Multiple version iconThere are 2 versions of this paper

Date Written: January 12, 2015

Abstract

We use administrative data from the IRS to examine the long-term impact of childhood Medicaid expansions. We use eligibility variation by cohort and state that we can relate to outcomes graphically. We find that children with greater Medicaid eligibility paid more in cumulative taxes by age 28. They collected less in EITC payments, and the women had higher cumulative wages. Our estimates imply that the government will recoup 56 cents of each dollar spent on childhood Medicaid by the time these children reach age 60. This return does not include estimated private gains from increased college attendance and decreased mortality.

Keywords: Health insurance, Simulated instrument, Mortality, EITC

JEL Classification: H2, I1, I38

Suggested Citation

Brown, David and Kowalski, Amanda and Lurie, Ithai, Medicaid as an Investment in Children: What is the Long-Term Impact on Tax Receipts? (January 12, 2015). Cowles Foundation Discussion Paper No. 1979, Available at SSRN: https://ssrn.com/abstract=2548603 or http://dx.doi.org/10.2139/ssrn.2548603

David Brown

U.S. Department of the Treasury, Office of Tax Analysis (OTA) ( email )

1500 Pennsylvania Ave., N.W.
Washington, DC 22203
United States

Amanda Kowalski (Contact Author)

University of Michigan at Ann Arbor - Department of Economics ( email )

Ann Arbor, MI
United States

Ithai Lurie

U.S. Department of the Treasury, Office of Tax Analysis (OTA) ( email )

1500 Pennsylvania Ave., N.W.
Washington, DC 22203
United States

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