Well-Being Prevention & Cures

Expanding health insurance for adults also increased coverage for children

“The magnitude of the effect is economically and practically meaningful, but the effect is fairly short-lived.”
Stethoscope and money.

Story at a glance

  • A 2008 experiment conducted in Oregon showed that more eligible children are enrolled in Medicaid once adults in their household also enroll.

  • The study was conducted prior to passage of the Affordable Care Act, which gave states the option to expand eligibility for Medicaid coverage.

  • Although more children were covered in the short-term thanks to the experiment, many remained uninsured, and enrollment dwindled over time. 

An analysis of the 2008 Oregon Medicaid lottery revealed that after three months, for every nine adults enrolled, one additional eligible child was also enrolled in the program — underscoring the magnitude of the “woodwork effect” on insurance enrollment. 

Findings were published in the American Economic Journal. The “woodwork effect” is a term used by analysts to describe how individuals eligible for benefits may come “out of the woodwork” to claim certain benefits. 

The findings of the current study highlight how adult access to Medicaid can significantly boost enrollment rates for previously uncovered children. However, authors caution many more remain outside the system. 

Health insurance coverage has been tied to a myriad of positive health outcomes including improved access to care, quality of life and increased survival rates for cancer patients, among others. 

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In 2008, the Oregon Medicaid lottery randomly selected low-income, uninsured individuals to be allowed to apply for the program, while children in these households were eligible despite any lottery outcome. A total of 90,000 applications were received for the 10,000 new slots created by the Oregon lottery. 

Throughout the U.S., as many as 14 percent of eligible adults and 7 percent of eligible children remain unenrolled in Medicaid.

Medicaid provides federally funded health insurance to the nation’s underserved populations while under the 2010 Affordable Care Act (ACA), states had the option of Medicaid coverage eligibility to residents. As of 2022, just 12 states have not adopted Medicaid expansion.

Effects of the Oregon data were not large enough to put pressure on the state’s Medicaid system, authors explained, noting most previously unenrolled children remain uninsured. Only around 6 percent of those who could have been enrolled thanks to the lottery actually became insured. The proportion of children enrolled also decreased over time.

“The magnitude of the effect is economically and practically meaningful, but the effect is fairly short-lived,” said study co-author Adam Sacarny of Columbia University in a statement

During ACA negotiations, some critics cautioned that the “woodwork effect” of Medicaid expansion with regard to children’s enrollment would increase the financial burden on taxpayers. However, the current study suggests any increase was modest.

According to researchers, the costs of covering children on Medicaid is also roughly four times less than that of adults.

More research is needed to better understand why more parents don’t sign up their eligible children for Medicaid. However, for adults, several barriers to enrollment exist including lack of knowledge on eligibility and perceived social stigma.