The Effect of Medicaid Policy on Mental Health and Poverty

This paper examines the interrelationships between mental distress, poverty, and Medicaid eligibility policy. This is accomplished by estimating an econometric model of mental health and income. We use data from a community survey to estimate the model. Simulations of the impacts of changes in Medicaid eligibility policy are performed using the model estimates. A central finding is that while there are gains in both mental health status and earnings from changes in Medicaid, the effects on poverty are small because of the design of transfer programs. Suggestions for further research are offered. (Summer 1989)