Making Government Work

The Short-Term Benefits of Helping Low-Income Kids Are Apparent. But What About the Long-Term Impact?

February 5, 2015
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The Short-Term Benefits of Helping Low-Income Kids Are Apparent. But What About the Long-Term Impact?
A new study suggests that providing benefits like Medicaid to low-income children pays off in the long-run. John Moore/Getty Images
A Yale economist reveals that Medicaid spending on children has lifelong effects.

Parents often wonder if all the money they pour into their kids will pay off in the end, resulting in productive adults. The federal government could ask the same, considering that it’s provided assistance to children through various programs, including Medicaid, which extended benefits to children back in the 1980s with the formation of the State Children’s Health Insurance Program.

Economist Amanda Kowalski of Yale University decided to find out. Partnering with David W. Brown and Ithai Z. Lurie of the U.S. Treasury Department, she analyzed tax return data and found that giving Medicaid benefits to kids does pay off in the long run. Those who relied on Medicaid as low-income children earned more money and paid more in income taxes when they became adults working than those of a similar income level (during childhood) who did not receive benefits.

Researchers found that, for every Medicaid dollar spent on a child, 14 cents were returned during their first few years as working adults. The amount rose to 56 cents by the time the recipient was 60 years of age. Additionally, they discovered that people who received Medicaid benefits at kids were less likely to die as young adults than people in the non-Medicaid low-income group. Plus, they were more likely to attend college.

The study’s huge sample size of 14.6 million people gives strength to its findings.

“Although it will take years to know the long-term impact of current expansions of Medicaid undertaken as part of the Affordable Care Act,” Kowalski tells the Yale News, “this study shows that the investments that the government made in Medicaid in the 1980s and 1990s are paying off in the form of higher tax payments now.”

MORE: 40 Years Ago, Researchers Sent Half These Children to Preschool. And What an Amazing Difference it Made

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