Medicaid and Recidivism
Introduction
Aslim, Mungan, and Yu (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, Mungan, and Yu (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
Net Cost
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.
- If the public bears the cost, then the total cost is equal to the mechanical cost of Medicaid, or $5,873 per inmate.
- If the government bears the cost of uncompensated care, the total cost of providing Medicaid is equal to the mechanical cost of Medicaid less the average cost of uncompensated care provided to uninsured individuals, or $5,873 – 1,577 = $4,296.
The paper takes into account that recently released inmates are more likely to rely on public assistance than the general population.
- For the more conservative estimate, the paper relies on participation and cost data for SNAP and TANF programs from the US Department of Agriculture and US Department of Health and Human Services, respectively. The cost of increased spending on SNAP and TANF due to reduced incarceration is the product of total spending on SNAP and TANF and the causal estimate of the reduction in the number of reimprisonments, or $42.
- For the less conservative estimate, the paper also considers estimated take-up rates of public assistance programs among the formerly incarcerated population from Sugie (2012) and estimates a weighted average of spending on SNAP and TANF to be $22.
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.
- For the more conservative estimate, the paper uses a marginal cost per inmate of $41.20 (Owens 2009), yielding total reduced costs due to averted incarcerations of $790 per inmate.
- For the less conservative estimate, the paper uses a global average daily cost per inmate of $99.56 (Mai and Subramanian 2017), yielding total reduced costs due to averted incarcerations of $1,909 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.
Willingness to Pay
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.
- When using cost of crime estimates from Cohen and Piquero (2009), the paper determines public savings of $14,100 due to averted violent crimes, $808 due to averted property crimes, $0 due to averted drug crimes, and $26 due to averted public order crimes, for a total of $14,934 (more conservative estimate).
- When using cost of crimes estimates from Miller, Cohen, Swedler, Ali, and Hendrie (2021), the paper determines public savings of $20,464 due to averted violent crimes, $1,006 due to averted property crimes, $32 due to averted drug crimes, and $60 due to averted public order crimes, for a total of $21,562 (less conservative estimate).
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, Hendren, and Luttmer (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.
- For the more conservative estimate, the paper assumes the public bears the cost. If the public bears the cost, then the cost is equal to the expected cost of the uncompensated care to the individual. Total willingness to pay for the value of the public insurance transfer when the public bears the cost and Medicaid is valued at 20% of the mechanical cost is $1,577 + $1,175 = $2,752 per inmate.
- For the less conservative estimate, the paper assumes the government bears the cost. If the government bears the cost of uncompensated care, then it is equal to the mechanical cost of providing Medicaid less the expected cost of the uncompensated care that the government would be obligated to pay had they not provided Medicaid to the individual. Total willingness to pay for the value of the public insurance transfer when the government bears the cost and Medicaid is valued at 48% of the mechanical cost is $0 + $2,819 = $2,819 per inmate.
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.
- For the more conservative estimate, the paper assumes ex-offenders value these liberties at $0.
- For the less conservative estimate, the paper combines its causal estimate of the of the share of reimprisonment by crime type and average length of sentence served with estimates from Abrams and Rolfs (2011) that suggest the willingness to pay to leave pre-trial detention is $4,603 per year. This yields a willingness to pay for reduced likelihood of imprisonment is $242 per inmate.
Aslim, Mungan, and Yu (2024) estimates the aggregate (more conservative) willingness to pay to provide Medicaid to formerly incarcerated individuals is $17,686 per inmate.
MVPF Summary
Aslim, Mungan, and Yu (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.
References
(2011). “Optimal Bail and the Value of Freedom: Evidence from the Philadelphia Bail Experiment.” Economic Inquiry, 49(3): 750–770. DOI: https://doi.org/10.1111/j.1465-7295.2010.00288.x
Aslim, Erkmen G., Murat C. Mungan, and Han Yu (2024). “A Welfare Analysis of Medicaid and Recidivism.” Health Economics, 33(11): 2463-2507. DOI: https://doi.org/10.1002/hec.4876
(2009). “New Evidence on the Monetary Value of Saving a High Risk Youth.” Journal of Quantitative Criminology, 25(1): 25–49. DOI: https://doi.org/10.1007/s10940-008-9057-3
(2019). “The Value of Medicaid: Interpreting Results from the Oregon Health Insurance Experiment.” Journal of Political Economy, 127(6): 2836–2874. DOI: https://doi.org/10.1086/702238
, & (2017). The Price of Prisons: Examining State Spending Trends, 2010-2015. Vera Institute of Justice. https://www.vera.org/publications/price-of-prisons-2015-state-spending-trends
(2021). “Incidence and Costs of Personal and Property Crimes in the USA, 2017.” Journal of Benefit-Cost Analysis, 12(1): 24–54. DOI: https://doi.org/10.1017/bca.2020.36
(2009). “More Time, Less Crime? Estimating the Incapacitative Effect of Sentence Enhancements.” The Journal of Law and Economics, 52(3): 551–579. DOI: https://doi.org/10.1086/593141
(2012). Punishment and Welfare: Paternal Incarceration and Families’ Receipt of Public Assistance. Social Forces, 90(4): 1403–1427. DOI: https://doi.org/10.1093/sf/sos055
Policy Features
- Category
- Social Insurance
- Sub-Category
- Health Adult
- Beneficiary Type(s)
- Adults
- Country of Implementation
- United States
- Empirical Method
- Difference in Differences
- Research Type
- Primary
- Peer Reviewed
- Yes
- MVPF Publication Link
- onlinelibrary.wiley.com/doi/10.1002/hec.4876