Insuring the Learning Curve: The Impact of Medicaid Expansions on Children’s Test Scores and School Absences

Health insurance protects families from the financial risk arising from unforeseen, adverse health shocks. It also provides access to medical care to repair health after illness. Accordingly, health insurance may raise the education achievement of children by making them healthier and more productive in school and by increasing family income that can be used for educational investments. In this paper, I test whether public health insurance carries spillover benefits on the education achievement of children. I test this hypothesis by examining whether Medicaid eligibility expansions occurring in the mid-1980s through the early 2000s improved the cognitive achievement and absenteeism of children in low-income environments.

Using data from the National Assessment for Education Progress (NAEP) in a novel approach that permits the comparison of students at the individual level, I assess whether Medicaid eligibility expansions improved math and reading test scores for 4^th and 8^thgraders. Importantly, I test whether public insurance eligibility expansions occurring at separate points of a child’s life differentially impacted test scores. A previous study (Levine and Schanzenbach 2009) similarly assessed this question using aggregated NAEP state data and found that Medicaid expansions occurring at birth are associated with improved reading test scores. Using individual-level data in a difference-in-differences approach that exploits Medicaid eligibility variation at the state, year, and age level, I test whether test scores and absenteeism rates of children attending low-income schools are more affected by Medicaid eligibility expansions than children attending higher-income schools.

I find that expanding contemporaneous (within 4 years of the test date) Medicaid income eligibility limits by an additional $10,000 is associated with a 0.05 standard deviation improvement on math test scores for 4^th graders in low-income schools and a 0.04 standard deviation improvement on math test scores for 8^th graders in low-income schools. Earlier-timed Medicaid expansions (between birth and age 7) are associated with improved reading test scores for 4^th graders in low-income schools. In contrast, Medicaid eligibility expansions have smaller, insignificant effects on test scores of children in higher-income schools. Analyses of the effect of Medicaid expansions on student attendance rates were largely uninformative as to whether absenteeism was a mechanism linking Medicaid expansions to improved test scores.