Expansion of Prenatal Care Services under California Medicaid
Introduction
In 1988, California funded expansions to its Medicaid program (Medi-Cal) that allowed pregnant undocumented immigrants to receive coverage. Miller et al. (2024) study the impact of this policy on health-care utilization for pregnant immigrants, birth outcomes, as well as later in life outcomes for the children such as school enrollment, college graduation, teen fertility, receipt of social services, and earnings at age 28. The paper utilizes California birth records linked to the 2000 Census and the American Community Survey from 2001 to 2011 as well as to other administrative datasets on earnings, program use, and post-secondary school attendance.
The paper analyzes the impact of this Medicaid expansion on all immigrant mothers because whether or not the mother is undocumented is not observed in the data. The paper utilizes a difference-in-differences design which compares births before and after the policy takes effect. They then compare the change between immigrant mothers’ births to the change between U.S. born mothers’ births.
The paper finds that in the short run the policy led to increased average gestation length and increased birth weight. In the long run, the children born to immigrants after the Medicaid expansion have higher rates of college graduation and lower participation in Medicaid and EITC benefits.
Pays for Itself
Net Cost
The paper includes the direct cost of the Medi-Cal benefit ($1,011) as well as two fiscal externalities: reduced government spending on the children later in life and expected income tax increases for the children once they are well into adulthood.
The paper estimates that the policy reduced Medicaid spending by $290 at ages 16 to 18 and reduced EITC receipt by $621 between ages 25 and 27. Although, the paper does not find any impacts of the program on earnings at the latest age observed in the data (28), there is a significant impact on college degree attainment. The paper estimates the returns this degree attainment will have later in life while taking into account increased public costs of education. The paper estimates the tax revenue net the public educational expenses as $823 per recipient. Thus, the total net cost is $1,011 – $290 – $621 – $823 = – $723.
Willingness to Pay
The paper only estimates the willingness-to-pay the expected net earnings due to increased college attainment. The paper estimates that netting out taxes and educational expenses, recipients will earn an additional $8,721.
MVPF Summary
The paper estimates a willingness-to-pay of $8,721 and a net government cost of -$723 which leads to an infinite MVPF.
The paper also estimates a 10 percent increase in the birth-rate of immigrant mothers due to the introduction of this policy. The paper notes that it is very difficult to incorporate this estimate into the MVPF. In theory, an additional birth should increase government costs such as education (and potentially other social services), but there is also likely increased tax revenue from an additional person in the workforce later in life. It is also difficult to conceptualize what the willingness-to-pay should be for an additional birth. It is not clear how incorporating these components would impact the estimated MVPF.
References
Miller, Sarah, Laura Wherry, Gloria Aldana (2024). “Covering Undocumented Immigrants: The Effects of a Large-Scale Prenatal Care Intervention.” NBER Working Paper 30299. http://www.nber.org/papers/w30299
Policy Features
- Category
- Social Insurance
- Sub-Category
- Child Health, Health Adult
- Beneficiary Type(s)
- Children and Youth, Mothers and pregnant women
- Average Age
- 27
- Country of Implementation
- United States
- Year of Implementation
- 1988
- Empirical Method
- Difference in Differences
- Research Type
- Primary
- Peer Reviewed
- No
- MVPF Publication Link
- www.nber.org/papers/w30299