The Effects of Income on Children’s Health: Evidence from Supplemental Security Income Eligibility under New York State Medicaid

Principal Investigator
NYU Robert F. Wagner Graduate School of Public Service

Overview

Approximately 16 percent of children in the U.S. live in families with incomes below the federal poverty threshold. This early-life exposure to poverty may have negative long-term effects, harming children and society over the life course. The Supplemental Security Income (SSI) program provides cash assistance to low-income children with disabilities, expanding family budgets and potentially allowing low-income parents to better protect the health of their children. In a new working paper, Hansoo Ko, Renata Howland, and Sherry Glied of the P4A Research Hub at New York University Robert F. Wagner Graduate School of Public Service, estimate the causal impacts of SSI on child health outcomes and medical expenditures.

Findings

This study exploits SSI’s 1200-gram birthweight eligibility rule to create a natural experiment, comparing children born just above and below the cutoff. Data were extracted from New York State Medicaid claims for low-income preterm infants born between 2006 and 2010, who were continuously enrolled in Medicaid from birth until age 8.

The authors found that SSI had a positive impact on children’s health and reduced Medicaid costs. Children with birthweights below the threshold for SSI eligibility had:

  • 30 percent lower Medicaid expenditures through age 8;
  • fewer hospital readmissions, shortened stays, and fewer specialist services; and,
  • a slower rate at which chronic conditions emerged in early life, which had persistent effects on later life Medicaid spending.

Implications for Policy and Practice

This study provides a strong economic argument that cash transfers targeting disabled children can help to offset early health shocks, which can have long-term negative impacts on health and human capital. These results suggest extra cash provided through SSI is an investment that pays off quickly in reduced Medicaid costs. 

Given some of the delays we found in enrollment, hospital and social service providers should be encouraged to promptly enroll families who are eligible for this benefit. Policymakers may also want to consider extending such cash transfers to other children, such as those born slightly above the birthweight threshold.

Published
in
The National Bureau of Economic Research