The Effect of Medicaid Expansions for Low-Income Children on Medicaid Participation and Insurance Coverage: Evidence from the SIPP

The commitment to public health insurance for children has increased in recent years, leading to two potentially contradictory concerns for public policy: that expanded availability of public insurance may lead families to decline private insurance for their children and that the additional public coverage may not reach many children without insurance. We use data from the 1987-1993 Surveys of Income and Program Participation and static and dynamic discrete panel data models to examine these two concerns. Using static models we find that the expansions resulted in increased Medicaid coverage, although the estimates of take-up among eligible children are smaller than estimates from previous research. We find little evidence of a negative relationship of any significant magnitude between eligibility for Medicaid and private coverage. We also allow the effect of eligibility to differ for children who have just become eligible and children who have been eligible for several months. We find that children who have been eligible for Medicaid longer are more likely to be enrolled in Medicaid but are no more likely to have lost private coverage. Including individual fixed effects reduces the magnitude of the estimated take-up effect, while the fixed effects estimates for the private insurance regression become negative and marginally statistically significant in some specifications. Using simple dynamic models of insurance choice, we find that insurance choice is quite persistent. The estimated long run impact of eligibility in the dynamic models is somewhat larger than the estimate from the static models, while the immediate impact of expanded Medicaid eligibility from the dynamic models is smaller than the estimated effect from the static models.