Health insurance and health the effect of medicaid eligibility expansions on parent health outcomes

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F? I loti ( Accepted for the Libraries Signature Removed / ::.t.; -,Gb'\,.l '-(ci _I Date accepted _ _ -'S " r'-_· _ 7-1\'02\'-1\ \-tGi\L\'t-\ 0\JlCC\1\L7 HEALTH INSURANCE AND HEALTH: THE EFFECT OF MEDICAID ELIGIBILITY EXPANSIONS ON PARENT HEALTH OUTCOMES by Jessica Beck Sara LaLumia, Advisor A thesis submitted in partial fulfillment of the requirements for the Degree of Bachelor of Arts with Honors in Economics WILLIAMS COLLEGE Williamstown, MA May 19,2008 Abstract This paper uses exogenous variation in Medicaid eligibility laws to evaluate the effect of Medicaid eligibility expansions on the self-reported health of lowincome parents in expansion states between 1994 and 2006 I find that Medicaid eligibility expansions are positively correlated with parental take-up rates although they have no effect on parental health outcomes I measure this relationship for four different parent samples; mothers, parents, poor health parents, and parents with income below 130% of the federal poverty line The insignificant relationship between eligibility expansions and health holds across all specifications except for the sickest parents For this population I find that the eligibility expansions reduce the probability of being in poor health by 0.7 to 0.9 percentage points, or by 35-45% TABLE OF CONTENTS Acknowledgements Introduction Background and Literature Review A Medicaid and Medicaid Eligibility Expansions B Literature Review 11 B.l Eligibility and Insurance Coverage 11 B.2 Eligibility and Health 12 B.3 Measures of Health: Self-Reported Health Status 13 Methodology and Data 15 A Methodology 15 B Data 21 C Sample 25 Results and Discussion 29 A Medicaid Coverage 29 B Health Status 35 C Possible Explanations 39 Conclusions 48 Tables 52 References 64 Appendix 67 Appendix 68 Appendix 71 Acknowledgements This project owes a great deal of debt to the patience and guidance of my friends, family, and professors I would particularly like to thank Professor LaLumia for her excitement, support, and willingness to explore this topic with me INTRODUCTION Despite improvements in public health insurance coverage, in 2006 47 million people below age 65, or about 15.8% of the non-elderly population, were uninsured The majority of this population (79%) is adults below 300% of the federal poverty line (Holahan 2007) Public policy and health care reform activists have long been concerned with improving health insurance coverage At the foundation of these issues is the assumption that offering coverage to the uninsured will improve their health by increasing access to quality medical care Health insurance eligibility expansions, the policy mechanism for improving coverage, are often motivated by the desire to increase medical care utilization and health among the poor However, economists have not conclusively determined if there is a relationship between insurance coverage and health Eligibility expansions can lead to improvements in coverage, but this does not necessarily increase utilization In addition, even if eligibility expands, this does not ensure that the uninsured actually take up insurance coverage There is some reason to believe that extending insurance to the uninsured can improve health Relative to individuals with private insurance or Medicaid, the uninsured population reports less access to primary care and preventive services According to a survey by the Kaiser Association, in 2004 44% of the uninsured did not have a usual source of care In contrast, only 18% of individuals with insurance report lacking a routine care site Additionally, the uninsured are also more likely to delay or forgo care, allowing conditions to get worse; 51 % report not having seen a doctor in the past year Individuals with insurance coverage, through Medicaid or private providers, report higher levels of access and use regardless of provider In contrast to the uninsured, 18% of those with Medicaid and 17% of individuals with private insurance report not having a routine care source and 27% of individuals in both plans report not having seen a doctor in the past year (Holohan 2007) The similarity in these numbers and the sharp contrast between the behaviors of the insured and uninsured suggest that expanding coverage is a viable way to improve access to care, and subsequently, health I test the hypothesis that Medicaid eligibility expansions will improve the health of the newly eligible Economists have previously studied the effect of Medicaid insurance expansion on insurance take-up and coverage The majority of the work in this field is concerned with the effect of expansions on children's health insurance coverage and only a small number of papers focus on the coverage of non-elderly poor adults In studies that focus on adult take-up, Medicaid expansions are believed to have increased coverage among the previously ineligible (Grogger and Aizer (2003)) Additional work that has analyzed the relationship between coverage, access to care, and utilization of care suggest that insurance coverage is positively correlated with each Few studies, however, have actually assessed the relationship between insurance expansion and health and those that use very small and specific samples Despite some conflicting results, most of these studies find small significant effects of insurance on health Using changes in California's Medicaid (Medi-Cal) law, Lurie (1986) finds a small improvement in health for patients at LA clinics More notably, Currie and Gruber ((1996a) (l996b) (1997)) also find small positive effects when measuring the effect of Medicaid expansions on the health of pregnant women, children, and infants Despite these positive findings, it is hard to generalize this research because infants, pregnant women, and patients at LA clinics are arguably quite different from the general population As Levy and Meltzer (2001) suggest, insurance expansions affect "vulnerable populations" who have the most to gain from increased resources The effect of insurance on the health of the general population is less clear In this paper, I add to the small amount of literature that assesses the effect of insurance coverage on health I address the limitations of previous works by using a general sample and a very general measure of health To this, I utilize changes in state Medicaid eligibility requirements that occurred as a result of federal law changes in 1996 During this time, the Personal Responsibility and Work Opportunity Reconciliation Act (PRWORA) separated Medicaid eligibility requirements from welfare eligibility rules Between 1996 and 2001 many states raised their income eligibility cutoffs and expanded coverage to parents of previously eligible children These changes varied in scale and occurred at different times in different states, creating variation in eligibility laws both across and within states I use data from the CPS March Supplement to assess the effect of the 1996 Medicaid eligibility expansions on health status I first measure the effect of the eligibility expansions on insurance coverage and then, unlike previous work, on health My model is consistent with that used by Grogger and Aizer (2003) although I expand it to measure the health of additional samples The March Supplement is an ideal data source because it over samples low-income individuals (those that qualify for Medicaid) and provides in depth information on income, health insurance, and state of residence It also includes some information on health conditions Unlike other authors, I supplement my CPS health data with information from the Integrated Health Interview Series (IHIS) in order to establish that my measure of health is valid and provide additional insight on the health behaviors and conditions of those that use Medicaid This allows me to comprehensively assess the effect of insurance expansions on the health status of the sample population Table The Effect of Medicaid Eligibility Expansions on Medicaid Coverage of Different Parent Populations with Interaction Terms for 1, 2, and 3+ Years After Expansion Medicaid Mothers (1) Treatment Interactl Interact2 I Interact3 State Unemp Parents (2) Coverage Poor Health Parents (3) -0.21 (15.63)** 0.099 (3.45)** 0.078 (3.03)** 0.099 (6.60)** 0.005 (1.00) -0.188 (16.35)** 0.083 (4.51)** 0.067 (2.60)* 0.091 (5.62)** 0.004 (1.03) -0.056 (20.81)** 0.035 (13.05)** -0.009 (15.68)** -0.237 (21.75)** -0.015 (5.67)** 0.084 (4.79)** -0.052 (2.52)* -0.241 (15.41)** 0.109 (2.38)* 0.085 (3.33)** 0.133 (6.14)** -0.0016 (0.26) -0.054 (8.97)** 0.034 (11.99)** -0.007 (7.66)** -0.238 (12.76)** -0.012 (3.09)** 0.041 (1.16) -0.054 (1.21 ) :t\1ale # of Children Age I Married Years ofEdu Black I White 0.032 (12.37)** -0.01 (17.49)** -0.27 (24.74)** -0.019 (5.47)** 0.088 (5.20)** -0.036 (1.83) Parents < 130% FPL (4) -0.179 (12.41)** 0.094 (3.77)** 0.086 (3.04)** 0.096 (5.78)** 0.006 (1.23) -0.058 (23.22)** 0.036 (11.17)** -0.009 (16.08)** -0.242 (22.35)** -0.016 (5.82)** 0.083 (4.74)** -0.054 (2.24)** Observations 37063 53784 21203 50613 R-S uared 0.21 0.18 0.14 0.18 Also included but not shown are controls for post expansion year dummies Cells contain marginal effects of weighted OLS regressions t-statistics are I in parentheses **p