Fiscal structure and programme response over the business cycle: evidence from Medicaid and SCHIP

Nicholas Moellman

Applied Economics Letters, 2021, vol. 28, issue 4, 299-304

Abstract: In this paper, I show that fiscal structure can have large effects on the ability of safety net programmes to provide benefits. I examine the response of child enrolment in Medicaid, which is funded through a matching grant, and enrolment in the State Children’s Health Insurance Program (SCHIP), which is funded through a block grant, to business cycle fluctuations. I find that while child Medicaid enrolment is relatively acyclical, a one percentage point increase in the unemployment rate decreases SCHIP enrolment per child by 6.3%, and a 1% decrease in gross state product (GSP) or GSP growth decreases enrolment in SCHIP by approximately 1%, suggesting block grant funding reduces the ability of safety net programmes to respond to macroeconomic fluctuations.

Date: 2021
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DOI: 10.1080/13504851.2020.1752891

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