This paper estimates the long-run effects of childhood Medicaid eligibility on adult health and economic outcomes using the program’s original introduction ( 1966–1970) and its mandated coverage of welfare recipients. The design compares cohorts born in different years relative to Medicaid implementation, in states with different preexisting welfare-based eligibility. Early childhood Medicaid eligibility reduces mortality and disability, increases employment, and reduces receipt of disability transfer programs up to 50 years later. Medicaid has saved the government more than its original cost and saved more than 10 million quality adjusted life years.

Covariate-adjusted cross-sectional comparisons show that Medicaid patients have worse health outcomes than other patients. We evaluate the validity of this research design for estimating the causal effect of Medicaid on mortality. Even after controlling for common covariates, Medicaid patients have worse preoperative health and lower socioeconomic status than privately insured patients. Controlling for additional variables shrinks the mortality differences but still does not eliminate imbalance in other predetermined variables. These results can be explained by fairly weak assumptions about unmeasured confounders. We conclude that cross-sectional observational methods do not produce valid causal estimates of Medicaid’s mortality effects.