Does SNAP Affect Medicaid Expenditures?

Evaluation of transfer programs almost exclusively occurs in silos, where the impact of programs such as SNAP and Medicaid are evaluated independently. Given that nutrition and health care consumption are both determinants of an individual’s health and that SNAP and Medicaid are increasingly administered jointly by states, such an approach may be inappropriate when evaluating these programs. If SNAP improves health, reductions in health care utilization – and therefore Medicaid expenditures – seem likely, but if SNAP participation increases Medicaid take-up, increases in expenditures are likely. To our knowledge no prior research has used administrative data to estimate the effects of SNAP on Medicaid expenditures.

This paper examines the aggregate impacts of SNAP enrollment and benefits on Medicaid enrollment and expenditures. Specifically, we use an instrumental variables approach to estimate the impacts of SNAP participation and benefits per capita over time on various groups’ Medicaid enrollment and subtypes of spending per capita. Using a nationally representative sample of households from the Survey of Income and Program Participation (SIPP), we construct a novel simulated SNAP eligibility variable making use of variation in many kinds of state SNAP eligibility policies. This variable is the proportion of the sample eligible for SNAP under the rules in each state and year and represents the overall “generosity” of each state’s SNAP policies. We use this simulated variable to instrument for SNAP participation. Data on SNAP participation and benefits are gathered from the USDA Food and Nutrition Service (FNS), and we construct Medicaid enrollment and expenditure measures using data from the Centers for Medicare & Medicaid Services (CMS).

Our results suggest strong ties between SNAP and Medicaid enrollment. A one percentage point increase in SNAP participation increases overall Medicaid enrollment by about 0.7 percentage points. We find suggestive evidence that SNAP participation increases overall Medicaid expenditure over time but has mixed effects on different categories of Medicaid spending.