Aslim et al. (2024) employs an event study model within a difference-in-difference framework to estimate the causal effects of offering public health insurance to formerly incarcerated individuals. The paper relies on data measuring prison admissions and releases from the National Corrections Reporting Program (NCRP) and exploits time varying state-by-state Medicaid expansions for estimates.
The paper finds that expanding Medicaid to recently released inmates reduces the average number of times they are reimprisoned by 11.5%. For those who were initially imprisoned for violent crimes and public order crimes, imprisonments decrease by 14.6% and 18.4%, respectively. Aslim et al. (2024) incorporates these results into estimates of the MVPF of expanding Medicaid to formerly incarcerated individuals under more conservative and less conservative assumptions.
MVPF = 3.5
The paper estimates the cost of providing Medicaid to formerly incarcerated individuals as the sum of the mechanical cost of the program, expenses due to increased spending on SNAP and TANF as a result of lower incarceration, savings from reduced incarceration, and forgone tax revenue due to inmates’ lost employment.
The mechanical cost of providing Medicaid is dependent on who bears the cost of uncompensated care received by uninsured individuals.
The paper takes into account that recently released inmates are more likely to rely on public assistance than the general population.
The government incurs savings from reduced rates of incarceration which is taken to be equal to the value of the sum, across all types of crimes, of the product of the causal estimate of the reduction in the number of reimprisonments, the share of reimprisonments, the average sentence served, and the average daily cost per inmate.
Finally, the paper considers forgone tax revenue due to inmates’ loss of employment while incarcerated. Willingness to pay for improved labor market outcomes, defined below, ranges from $0 to $307 per inmate. Assuming a tax rate of 20%, the government forgoes between $0 (more conservative) to $61 (less conservative) of income tax revenue per inmate.
The total cost of providing Medicare to formerly incarcerated individuals using the more conservative estimates is $5,125 per inmate.
Aslim et al. (2024) estimates the willingness to pay for extending Medicare to formerly incarcerated individuals as the sum of its willingness to pay for fewer criminal victimizations, improved labor market prospects, the value of public insurance transfer, and the reduced likelihood of becoming incarcerated as a result of the policy. All estimates are given in 2020 dollars.
The paper determines the policy reduces reimprisonments by 0.022 each year for all types of crimes. The paper estimates imprisonment-to-victimization ratios for each type of crime using data from the National Crime and Victimization Survey, National Prisoner Statistics, and the Supplementary Homicide Reports.
The paper estimates willingness to pay for improved labor market outcomes to be the product of the estimated number of averted crimes by crime type due to Medicaid expansion, the employment rate of low income adults, and the average length of sentences served, yielding an estimate of $307 per inmate (less conservative estimate). For the more conservative estimate, the paper considers the case in which the inmate was unemployed prior to incarceration. The conservative assumption in this case is that the willingness to pay for improved labor market outcomes would be $0 per inmate.
The paper estimates willingness to pay for the value of the public insurance transfer to be equal to the sum of (1) the value of Medicaid to the recipient and (2) the cost of uncompensated care that would be received by the inmates were they not insured. For (1), the average cost of uncompensated care per uninsured adult is $1,577 annually. Following Finkelstein et al. (2019), the paper assumes recipients value Medicaid receipt to be between 20% to 48% of the mechanical cost of Medicaid to the government, or $1,175 to $2,819 per inmate. Part (2) is considered to be equal to the cost of the care provided, which is dependent on who is assumed to bear the cost of uncompensated care.
The paper considers individuals’ willingness to pay for reduced likelihood of imprisonment to correspond to the amount that they value the personal liberties available to them outside of prison.
Aslim et al. (2024) estimates the aggregate (more conservative) willingness to pay to provide Medicaid to formerly incarcerated individuals is $17,686 per inmate.
Aslim et al. (2024) estimates the MVPF of providing Medicaid to formerly incarcerated individuals to be 17,686/5,125 = 3.45 per inmate using the more conservative estimates. Using the less conservative estimates raises the MVPF to over 10.
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