Medicaid Introduction to AFDC-Eligible Families

In the 1960s, Medicaid was introduced which provided families enrolled in Aid to Families with Dependent Children (AFDC) access to free health insurance. Goodman-Bacon (Forthcoming) uses variation in AFDC enrollment across states prior to the national Medicaid expansion to estimate the impact of Medicaid on later-life outcomes for children born in the 1936-1976 cohorts.

MVPF SUMMARY

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Goodman-Bacon (Forthcoming) documents the impact on taxes and transfer spending on children in adulthood. The author finds that Medicaid resulted in significant later-life earnings increases and reductions in mortality. Hendren and Sprung-Keyser (2020) use estimates from an early working paper (Goodman-Bacon 2017) that provides an MVPF estimate of the policy using the earnings outcomes of affected cohorts through their mid-40s. They find an MVPF of 10.24. However, in subsequently published work, Goodman-Bacon (Forthcoming) provides additional years of outcome data and finds that the earnings gains persist so that the policy pays for itself. In particular, Goodman-Bacon finds that “the net “cost” of providing $1 of Medicaid in this era is -$1.17.” This implies an infinite MVPF.