New Medicaid Study: Expanding Insurance Coverage for Adults Also Helps Enroll Children

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By Columbia Mailman School of Public Health

Expanding Medicaid coverage for adults also helps to cover children, according to a new study by researchers at Columbia University Mailman School of Public Health, the University of Chicago, and MIT. The study examined Oregon’s 2008 Medicaid lottery and found that for every nine adults who gained healthcare coverage, one additional child also enrolled. The research describes the impact of expanded adult Medicaid eligibility on the enrollment of already-eligible children.

The findings of the paper, “Out of the Woodwork: Enrollment Spillovers in the Oregon Health Insurance Experiment,” are published in the August 2022 issue of American Economic Journal: Economic Policy.

In the lottery, some low income uninsured adult enrollees were randomly selected to be allowed to apply for Medicaid. Winning or losing the lottery did not change whether their children were eligible for coverage. The researchers asked whether expanding eligibility for one group, adults, helped to bring another group, their children, into coverage. Prior studies have referred to this phenomenon as the “woodwork effect” or the “welcome mat effect”.

“Our study shows that expanding Medicaid eligibility can improve insurance coverage rates for people who weren’t even the target of the expansion,” said Adam Sacarny, PhD, the study’s first author and an assistant professor of health policy and management at Columbia Public Health. “In this case, when adults signed up for Medicaid, their children gained coverage, too.”

Medicaid provides health insurance coverage to 81 million people in the U.S., including 34 million children. About 7 percent of children who are eligible for Medicaid haven’t signed up for coverage and are still uninsured. The paper adds to the existing literature about the barriers to enrolling in health insurance and other social programs. It also sheds new light on the policies of the 2010 Affordable Care Act, which included an expansion Medicaid to cover low-income people. The researchers studied an earlier, randomized expansion of Medicaid for adults that took place in 2008 in Oregon.

“This research highlights the value of conducting further secondary studies of randomized trials,” said Sacarny. “When you link trials with additional administrative data, you can use them to study additional, potentially really important questions for economic and social policy.”
 
The study also provides a new perspective on the broader impacts of Medicaid coverage expansions. “We found evidence of these woodwork effects,” said co-author Amy Finkelstein, PhD, a professor in MIT’s Department of Economics. “We reject the hypothesis that these types of spillovers don’t occur. On the other hand, relative to claims in the media and in some previous work about potentially large woodwork effects, in excess of half of the direct effect, our effects are quantitatively much smaller than what was conjectured.”
 
While the researchers found meaningful woodwork effects, they also found that the effects were short-lived. They showed that children of lottery winners saw an immediate jump in coverage as their parents signed up, but children of lottery losers eventually gained coverage, too.

“Therefore, our results suggest that woodwork effects mainly to encourage earlier enrollment for children who would have otherwise gained coverage later,” observed Sacarny.
 
The results point to two reasons there is incomplete coverage among people who are eligible for Medicaid, according to Sacarny. First, Medicaid’s eligibility rules can be complicated and some families may not be aware of them. In this experiment, when adults “won” the opportunity for to enroll in Medicaid, they may have learned about their children’s eligibility. Second, applying for Medicaid can be burdensome: at the time in Oregon, the application packet was 46 pages long with up to 19 pages of fill-in prompts. However, since the application was for an entire household, an adult signing up could easily include their children. 

“Incomplete enrollment in social insurance programs is pervasive including in the Medicaid program,” said Sacarny. “The present study demonstrates the many ways that randomized trials, like Oregon’s, can be used to generate further findings. Given a valid experiment, scholars can think creatively about how to identify its effects, and keep leveraging that experiment to produce rigorous results.”

Katherine Baicker, professor and dean at the University of Chicago Harris School of Public Policy, is a co-author.

The study was supported by the National Institute on Aging.

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