Not everyone who is eligible for health insurance subscribes to it. Consider Medicaid, the national health insurance plan for low-income people. In the United States, approximately 14% of eligible adults and 7% of eligible children are not enrolled in Medicaid.
It turns out that when adults enroll in Medicaid, some of them also enroll their eligible children. This is an example of the “carpentry effect,” as policy analysts have called it — sometimes people eligible for social programs can come out of the carpentry, so to speak, to claim benefits.
A new study led by an MIT economist quantifies this effect, using Oregon as a case study. Research shows that for every nine adults who gained access to Medicaid in Oregon through a special enrollment lottery, one previously eligible child was also added to Medicaid rosters.
But while the results show carpentry effects exist in Social Insurance, in Oregon the effect was not large enough to create major strains on its Medicaid system, which is jointly funded by the federal and federal governments. States. Most eligible children who were not already enrolled in Medicaid remained unenrolled; only about 6% of those who could have signed up signed up when an adult in their household won the Oregon Lottery.
“We find evidence for these carpentry effects,” says Amy Finkelstein, a professor in MIT’s Department of Economics and co-author of a new paper detailing the findings. “We reject the hypothesis that these types of fallout do not occur. On the other hand, compared to claims in the media and in some previous work of potentially large carpentry effects greater than half the direct effect…our effects are quantitatively much smaller than had been conjectured.
The article, “Out of the Woodwork: Enrollment Spillovers in the Oregon Health Insurance Experiment,” appears in the American Economic Journal: Economic Policy. The paper’s co-authors are Adam Sacarny PhD ’14, assistant professor at Columbia University Mailman School of Public Health; Katherine Baicker, Dean and Emmett Dedmon Professor at the University of Chicago Harris School of Public Policy; and Finkelstein, John and Jennie S. MacDonald Professor of Economics at MIT.
Win the insurance lottery
To conduct the research, the researchers used data from the 2008 Oregon Health Insurance Experiment, a unique project conducted by the state of Oregon. With enough funds to allow for some expansion of Medicaid to low-income, uninsured adults, Oregon held a lottery for new Medicaid entry, receiving about 90,000 applications for 10,000 new slots.
This formed the basis of a useful experiment: Because those who win and lose the lottery do so randomly, researchers can compare what happens next to those who win and don’t win the lottery to determine the effects of obtaining health insurance. Finkelstein, Baicker, and other colleagues have published several studies based on the Oregon Lottery showing that having Medicaid increases health care utilization, reduces out-of-pocket expenses and medical debt, and reduces incidence of depression, among others.
Since the children of adults who entered the Oregon lottery were already eligible for Medicaid, the lottery allowed researchers to ask: If adults get Medicaid, does that make them more likely to enroll their children as well? ?
“It allowed us to examine the question of what happens to the children of adults who win the lottery, versus the children of adults who don’t win the lottery,” says Finkelstein. “We were just trying to find out if there were any impacts on children and how big were they.”
The effect was real, but modest in size and faded over time. One year after the lottery, the difference in enrollment among children from lottery winning and losing households was about one-third of its original size; some adult lottery winners had their children’s enrollment status expired, while some children of adults who lost the lottery ended up enrolling in Medicaid.
“The magnitude of the effect is economically and practically significant, but the effect is quite short-lived,” observes Sacarny.
The findings add information to a public debate that took place after President Barack Obama signed into law the Affordable Care Act (ACA) in 2010. The ACA allowed states to expand Medicaid to other adults low income, although many states have not done so. Some observers have suggested that the effects of carpentry on child enrollment could significantly increase the cost to taxpayers of expanding Medicaid for adults. The current study suggests that these costs may be modest.
As Finkelstein notes, however, the current study is simply intended to inform public debate about the effects of Medicaid and carpentry, and to produce better estimates of insurance expansion.
“Whether you think previously eligible children enrolling in Medicaid when their parents become eligible is an added benefit or an added cost of expanding Medicaid to adults depends on your perspective on the costs and benefits of public health insurance,” says Finkelstein. Either way, Finkelstein observes, the cost of Medicaid coverage for children is about four times less than the cost of adult coverage.
“From a budget standpoint, children tend to be much cheaper to cover than adults,” says Finkelstein. “They have lower health spending.”
Understanding Barriers to Enrollment
The current paper also adds to an existing literature on barriers to enrollment in health insurance and other social programs. There are a variety of reasons why people who are eligible for social programs may not enroll: they may not know they are eligible, may find the process too complicated, or may feel stigma associated with these programs.
Finkelstein, for his part, has also studied this question. Along with fellow MIT economists Abhijit Banerjee and Benjamin Olken, among other academics, she co-authored a paper last year about an experiment designed to encourage people to enroll in Indonesia’s national health insurance program. . The study found some benefit from subsidies and enrollment assistance, but no apparent benefit from simply providing people with information.
Researchers who have studied the societal impact of Medicaid praise the study. Sarah Miller, assistant professor of business economics and public policy at the University of Michigan’s Ross School of Business, calls the research “a fantastic new analysis of America’s historic Medicare experience.” Oregon. The experimental design gives us the opportunity to learn in a very compelling way how parental eligibility for Medicaid affects child enrollment.
Miller also observes that by identifying a mechanism that may stimulate a limited number of new enrollments, the research indicates that we have more to learn about why families are still leaving eligible children unenrolled in Medicaid: “This study tells us that making their parents eligible won’t move the needle much, but more research is needed to find out exactly why,” she says.
As Sacarny points out, the current study also demonstrates the many ways that randomized trials, like the one in Oregon, can be used to generate other outcomes. Given a valid experience, researchers can think creatively about how to identify its effects and continue to build on that experience to produce rigorous results.
“This research highlights the value of conducting further secondary studies of randomized trials,” Saccarny said. “What we show here is that when you combine trials with additional administrative data, you can use them to investigate additional questions that are potentially very important for economic and social policy.”
The current paper may also be the last Finkelstein is working on that stems from the 2008 Oregon Health Insurance Experiment; she has co-authored at least eight other peer-reviewed articles exploring the effects of Medicaid enrollment on people, work that has garnered widespread attention and helped inform public debate about health insurance.
“For me, it’s kind of the end of an era,” says Finkelstein. However, she and her colleagues have developed a public-use data file so that other researchers can dig deeper into all of the Oregon data and potentially surface additional findings as well.
The study was supported, in part, by the National Institute on Aging.