Economists have found that expanding medical insurance can significantly reduce personal bankruptcy and financial hardship. And according to a paper in the American Economic Journal: Applied Economics, this type of investment in public health can also yield public safety benefits.

Authors Samuel Arenberg, Seth Neller, and Sam Stripling show that low-income children whose families received health insurance coverage were significantly less likely to go to prison as an adult.

The finding comes from a Medicaid expansion passed by the US Congress in 1990 that primarily benefited Black children. Using a regression discontinuity design, the researchers compared Black children born just before September 30, 1983—the date of the eligibility cutoff—to those born just after.

Figure 2 from the authors’ paper shows the impact of this cutoff on adult incarceration in Florida.

Figure 2 from Arenberg et al. (2024)

Each blue hollow dot represents the three-month binned average of the logarithm of the number of inmates in the sample by date of birth relative to the cutoff. The solid blue lines are lines of best fit, while the dashed curves are 95 percent confidence intervals. The vertical dashed line indicates the eligibility cutoff date for the Medicaid program—September 30, 1983. 

Panel A shows a clear discontinuity in the number of incarcerations for Black adults born after the cutoff. This decrease is approximately 5.1 percent, which represents roughly 259 fewer incarcerations of Black individuals born in the year after the cutoff. Panel B shows that there is no corresponding jump in incarcerations for non-Black adults, who experienced almost no gain in Medicaid coverage as a result of the policy.

The authors conclude that if expenses associated with confining inmates and lost earnings from incarceration are taken into account, the Medicaid expansion was highly cost-effective, even without considering any health benefits from the expanded coverage.