Duke 2008 | ASHE | Equity and Efficiency in Health and Healthcare

This paper investigates the effects of expanding public health insurance eligibility for older children. Using data from the National Health Interview Surveys from 1986 to 2005, we first show that although income continues to be an important predictor of children's health status, the importance of income for predicting health has fallen for older children in recent years. We then investigate the extent to which the dramatic expansions in public health insurance coverage for older children in the past decade are responsible for the decline in the importance of income in predicting the health of older children. Since persons who are eligible for public health insurance may have unobserved characteristics that affect their health, we instrument for individual Medicaid/SCHIP eligibility using an index of the generosity of the state's public health insurance programs. This index is the fraction of a fixed group of children drawn from the same age group and year in the March Current Population Survey who would be eligible for public health insurance in each state. Using this instrument, we find that while eligibility for public health insurance unambiguously improves current utilization of preventive care, it has little effect on current health status. We suggest that this may be because health is a stock, which is affected not only by current investments in health, but also by past investments. Accordingly, we use a reduced form model to investigate the effect of past Medicaid/SCHIP eligibility on the health of children. For these analyses, we use the fraction of children in the child's state who were eligible for Medicaid/SCHIP when the child was born and in the first few years of life as the index of the generosity of the state's public health insurance programs. Using this method, we find some evidence that Medicaid eligibility in early childhood has positive future effects on health. In particular, our estimates suggest that more generous health insurance coverage at ages 2, 3, and 4 is associated with better health status when the child is 9 to 17. This may indicate that adequate medical care early on puts children on a better health trajectory, resulting in better health at older ages. Results also suggest that although contemporaneous health insurance coverage increases access to care, lagged coverage also has important effects (perhaps by making it more likely that the family has gotten into the habit of taking the child for regular checkups, and has established a medical ?home?).