The Value of Medicaid: Interpreting Results from the Oregon Health Insurance Experiment

Abstract

We develop a set of frameworks for welfare analysis of Medicaid and apply them to the Oregon Health Insurance Experiment, a Medicaid expansion for low-income, uninsured adults that occurred via random assignment. Across different approaches, we estimate recipient willingness to pay for Medicaid between $0.5 and $1.2 per dollar of the resource cost of providing Medicaid; estimates of the expected transfer Medicaid provides to recipients are relatively stable across approaches, but estimates of its additional value from risk protection are more variable. We also estimate that the resource cost of providing Medicaid to an additional recipient is only 40% of Medicaid's total cost; 60% of Medicaid spending is a transfer to providers of uncompensated care for the low-income uninsured.