Childhood Medicaid Coverage and Later Life Health Care Utilization

Academics have speculated that investments in health, even late in childhood, could have longterm
beneficial effects on health. Relatedly, policy-makers have argued that providing public
health insurance coverage to the uninsured may lower long-run costs by reducing the need for
expensive hospitalizations and emergency department visits later in life. In this paper, we
provide evidence for such phenomena by exploiting a legislated discontinuity in the cumulative
number of years a child is eligible for Medicaid based on date of birth. We find that having more
years of Medicaid eligibility in childhood is associated with fewer hospitalizations and
emergency department visits in adulthood. For blacks, we find a 7% to 15% decrease in
hospitalizations and a 2% to 5% decrease in emergency department visits associated with the
legislated discontinuity in Medicaid eligibility. Our effects are particularly pronounced for
hospitalizations and emergency department visits related to chronic illnesses and those of
patients living in low-income zip codes. Examining diseases by category, we find that a broad
range of conditions were affected. Furthermore, we find evidence suggesting that decreases in
utilization may be larger in states where the difference in the number of Medicaid-eligible years
across the cutoff birthdate is greater. Calculations suggest that lower rates of hospitalizations and
emergency department visits during one year in adulthood for blacks offset between 3 and 5
percent of the initial costs of expanding Medicaid for all children.