The Impact of Medicaid Beyond Health

The Affordable Care Act (ACA), signed into law in March 2010, has led to a major transformation in the American health care system by providing millions of individuals with access to care.  Since the expansion of Medicaid under the ACA, health and policy researchers have extensively investigated the effects of this policy change. There is a well-established scholarship illustrating that Medicaid expansions increase health insurance enrollment and utilization of health care, while reducing mortality and improving health in general. An important, yet under-studied question, is whether Medicaid’s impact goes beyond health improvements. The short answer is “yes.”

In a recently published paper, Murat Mungan, Carlos Navarro, Han Yu, and I explored the effects of Medicaid expansions on criminal recidivism. Most inmates cycling in and out of the criminal justice system have serious mental health and addiction problems. Prior to the ACA, released inmates were not eligible for Medicaid in half of the states in the U.S. based on their income reported by the Federal Bureau of Prisoners.

Limitations in accessing coverage and medical treatment increase the likelihood of returning to prison within three years with existing behavioral health issues. We found that Medicaid expansions not only improve ex-offenders’ access to medical treatment, but significantly reduce their likelihood of returning to prison.

Specifically, using data from the National Corrections Reporting Program, we found a sharp decline in the likelihood of violent crime recidivism following the expansion of Medicaid. In fact, categorizing the changes in recidivism rates by first offense and re-offense types revealed a very interesting finding: the expansion of Medicaid operates by reducing the repeated commission of violent crimes. To gain further insights into potential mechanisms through which health insurance access affects recidivism, we investigated health care use by this population.

Medicaid can deliver substantial indirect benefits in the form of reduced crime in addition to its direct health benefits.

We found an increase in the number of admissions to substance use disorder (SUD) treatment among individuals covered by Medicaid in expansion states after 2014. This was particularly driven by individuals referred to treatment from the criminal justice system after the policy change.

Taken together, the findings on recidivism and admission to SUD treatment can be explained by our theoretical framework that increased Medicaid coverage reduces perceived non-monetary benefits from committing crimes among justice-involved individuals. In other words, Medicaid may be reducing the commission of impulsive crimes by reducing self-control problems through SUD and mental health treatment. This theory is consistent with findings in the psychiatry literature, which suggest that property crimes are more likely to be planned, whereas violent crimes are more likely to be committed impulsively. Another critical observation in this scholarship is that SUD coupled with genetic dispositions can increase the propensity to commit impulsive crimes.

Programs like Medicaid benefit inmates in accessing care, and support disadvantaged populations generally. Yet, they are the subject of criticism. Some argue that we should not be providing coverage to inmates because it is too costly for the society.

We refuted this argument in a follow-up paper by estimating the benefits and net-costs (i.e., cost of providing Medicaid net of fiscal externalities, such as spending on public assistance programs, incarceration costs, etc.). Put differently, we estimated the ratio between benefits and net-costs associated with providing exiting inmates increased access to Medicaid. This is coined as the Marginal Value of Public Funds, or “MVPF”, in the literature. Our estimates range between 3.44 and 10.61, making it one of the most welfare-enhancing policies whose MVPF has been calculated and reported in the Policy Impacts Library.

The main take-away is that Medicaid can deliver substantial indirect benefits in the form of reduced crime in addition to its direct health benefits.

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