WOULD POOR PEOPLE prefer cash instead of Medicaid?

In a new paper, Amy Finkelstein, Nathaniel Hendren and Erzo F.P. Luttmer note that the Congressional Budget Office values the transfer at the amount of money the government is spending on Medicaid. But of course, the value to recipients of any “in kind” benefit has only a weak relationship to the actual amount of money spent. If I give you a Doberman pinscher and $3,000 worth of shampoo samples marked “not for resale,” I have certainly transferred something with value, but most people would probably not pay $3,000-plus for it, even if they had the money.

So instead, they looked at data from the Oregon Medicaid Study to try to get a more nuanced assessment of the actual value to the people the benefit is supposed to be for. Here’s what they came up with: “Our baseline estimates of the welfare benefit to recipients from Medicaid per dollar of government spending range from about $0.2 to $0.4, depending on the framework, with a relatively robust lower bound of about $0.15.” You read that right: 15 cents of value for every dollar spent.

Not that unusual for a government program, I suspect, with the graft-value probably being considerably higher. Also, being on Medicaid doesn’t seem to make you live any longer.