Did recent medicaid reforms cause the caseload explosion in the food stamp program?

Abstract

I examine whether changes in Medicaid eligibility for young children can help explain the caseload growth in the Food Stamp program between 1987 and 1995. Medicaid may increase food stamp participation through increased awareness about other welfare benefits. It could also reduce earnings through perverse labor supply incentives, thereby increasing food stamp participation. The Medicaid expansions enacted during the 1980s offer a unique opportunity to examine empirically Medicaid's interaction with the Food Stamp program because they conditioned eligibility on the age of the child. Households with ineligible children (based on the child's age) serve as a control group to isolate Medicaid's effect. They help to eliminate many other plausible explanations for the rise in food stamp participation, including economic fluctuations at the state and national levels. I use the Survey of Income and Program Participation (SIPP) to tackle this question. It shows evidence that expanding Medicaid eligibility increased food stamp participation. The effect is quite modest, however. The expansions explain less than 10 percent of the growth in food stamps, substantially smaller than previous estimates. Moreover, its effect on food stamp participation comes entirely through increased program awareness, rather than from any change in labor supply.