Medicaid Leads to Higher Tax Revenues

January 14, 2015 Taxation in USA

medicaidWASHINGTON D.C. – Providing tax benefits and health insurance to low-income families leads to an increase in the taxes paid and benefits taken by the children of such families later in life.

Children from families which benefited from Medicaid tax benefits in the 1980s and the 1990s in the USA paid more in taxes in adult life, according to new information in a press release issued by researchers at the Yale University.

The Medicaid system was originally established in the 1960s as a public health insurance system for families with low incomes, however, the system was greatly expanded in the 1980s with the State Children’s Health Insurance Program to provide insurance for children whose families earned too much to originally qualify for Medicaid but too little to afford health insurance.

The researchers found a strong positive correlation between the number of years that children benefited from the expanded Medicaid system, and the chance that they would attend college, or obtain higher paying jobs.

It was also shown that by the age of 28, an average female who benefited from Medicaid paid as much as USD 247 extra in taxes compared to children who did not receive Medicaid, while men of the same age paid an extra USD 127.

In addition, the researchers also found that an increased time eligible for Medicaid led to a small but statistically significant reliance on Earned Income Tax Credits later in life.

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