KWEN Seminar: Ajin Lee

“The Value of Improving Insurance Quality: Evidence from Long-Run Medicaid Attrition” (with Boris Vabson)

Abstract: The US government increasingly provides public health insurance benefits through private firms. This paper examines the long-run effects of private provision on Medicaid beneficiaries. We exploit quasi-random variation in initial assignment to private Medicaid coverage in New York: an exclusion from enrollment in private Medicaid based on birth weight below 1,200 grams. We find that infants who receive private coverage at birth are less likely to subsequently leave Medicaid than infants who receive public coverage at birth. Medicaid infants enjoy greater access to care and improved preventive care under the private option, suggesting that higher quality under private Medicaid may have encouraged beneficiaries to stay on Medicaid. We rule out alternative explanations of this effect, such as risk-selection by private insurers or lower transaction costs under private Medicaid.