Children who were exposed to Medicaid as children make greater contributions to the tax system by age 28, a new study finds. The study examines recent tax returns for almost all children born in the United States from 1981-1984, numbering approximately 10 million. The study finds that the federal government recouped 14 cents for each dollar that it spent on childhood Medicaid by the time these children reached age 28. Assuming that these higher tax payments will persist, the federal government can expect to recoup 56 cents on each dollar by the time these children reach age 60.
Higher adult tax payments are not the only positive effect of childhood Medicaid. The study finds that children exposed to Medicaid are less likely to die prematurely in adulthood. They are also more likely to attend college.
The study, “Medicaid as an Investment in Children: What is the Long-Term Impact on Tax Receipts?” was released this week. It is coauthored by three economists: David Brown and Ithai Lurie, from the Office of Tax Analysis at the US Department of Treasury, and Amanda Kowalski, from the Department of Economics at Yale University and the NBER.
The study is available here: NBER Working Paper