A model of Medicaid’s poverty trap

The design of legislation which regulates Medicaid eligibility creates a poverty trap. In California, generally those who have income below 250% of the federal poverty level and who have limited assets are eligible for Medicaid. (In reality California’s Medicaid eligibility is more complicated than this. For full details of eligibility requirements see “Medi-Cal Facts and…

Did Serrano Cause Prop 13?

Passed in 1978, Proposition 13 was a ballot initiative to amend the state constitution to limit property taxes to a 1% of a homes value. The amendment also capped the annual growth rate in property value assessment at 2% per year until the house is resold.   William Fischel (1989) argues in “Did Serrano Cause…

Difference in Difference Estimation

Difference in Difference (DD) is a commonly used empirical estimation technique in economics. Let us take a hypothetical example where a state (Wisconsin) passes a bill which makes employer-provided health insurance tax deductible. Let us also assume that in the year after the bill passed (year 2) the percentage of firms offering health insurance increased…

Profile of Medicaid participants

As of 2002, approximately 41 million people were on Medicaid. That is approximately 14% of the population of the United States. Who are the people on Medicaid? We can generally divide the people who receive Medicaid into four categories: 1) poor adults, 2) elderly who can not afford Medicare co-payments or deductibles 3) children and…