The Value of Medicaid: Interpreting Results from the Oregon Health Insurance Experiment

Date:  December, 12th - 12h 

Room: 23.103 (Mercè Rodoreda Building)  - Universitat Pompeu Fabra, Barcelona 

Abstract: We develop a set of frameworks for valuing Medicaid and apply them to welfare analysis of the Oregon Health Insurance Experiment, a Medicaid expansion for low-income, uninsured adults that occurred via random assignment. We estimate that the value of Medicaid to recipients is roughly between one-third and three-quarters of Medicaid's monetary transfers to the external parties who provide partial implicit insurance for the low-income uninsured. Medicaid provides value to recipients through both its expected transfer of resources and its insurance function of moving resources across states of the world. Across approaches, the insurance value to recipients varies considerably, but the transfer value to recipients is stable and always substantial relative to the insurance value. Whether or not the value of Medicaid to recipients exceeds its net (of monetary transfers to external parties) costs depends on the approach used.

Biography: Erzo F.P. Luttmer is the Dartmouth Professor in Economics at Dartmouth College. He is also a Research Associate at the NBER, a Research Fellow at IZA, and editor of the Journal of Public Economics. He holds a PhD in economics from Harvard University. His research seeks to understand what drives the demand for redistribution and social insurance, and how the implementation of redistribution and social insurance programs can be improved. Many of his papers highlight the important role of social effects in economic behaviour. Much of his more recent research explores the role of cognitive limitations on demand for and design of social insurance programs.

www.nber.org/~luttmer