The Design of Public Health Insurance Programs and the Welfare of Low-Income Groups

Abstract

This dissertation investigates how the structure and incentives of the U.S. health insurance system affect access to care and health outcomes for low-income populations. While public and private insurance expansions have increased coverage, many individuals remain underserved due to fragmentation in insurance responsibility, incentives for selecting the healthiest individuals, and gaps in geographic access to providers. I address these issues through three empirical chapters. The first chapter examines how fragmented financial responsibility affects insurers’ incentives to provide preventive care. I study a policy change in New York’s Medicaid program that, beginning in 2012, made private Medicaid plans financially responsible for all newborns, including very low birth weight infants previously covered by the public plan. Once they became responsible for covering these costly newborns, private Medicaid plans increased their investment in prenatal care services designed to reduce low birth weight deliveries and neonatal costs. These effects were especially pronounced among enrollees with a high ex-ante risk, suggesting that fragmentation had both efficiency and equity consequences. The second chapter, co-authored with Tim Layton and Mark Shepard, evaluates a 2017 Medicare Advantage policy that increased payments to insurers for enrolling low-income dual-eligible beneficiaries. Using administrative claims and plan-level data, we find that while payments increased by nearly $900 per low-income enrollee annually, insurers made only modest improvements to benefit offerings and showed no clear gains in quality or enrollment. In the context of a system characterized by generous over-payments—such as that of Medicare Advantage—our findings suggest that further increasing subsidies may be insufficient to meaningfully change insurer behavior in favor of low-income populations. The third chapter, co-authored with Amanda Su, studies whether access to Federally Qualified Health Centers (FQHCs) substitutes for formal insurance coverage. Leveraging staggered FQHC openings across counties, we find that FQHCs improve health outcomes—as shown by reductions in all-cause mortality—without reducing insurance enrollment. These findings suggest that physical proximity to care enhances the effectiveness of insurance and serves as an essential complement to coverage. Together, these chapters highlight that improving healthcare for low-income populations requires more than expanding coverage; it requires better alignment of incentives, simplified insurance structures, and greater investment in the infrastructure that connects people to care.