The Effect of the Medicaid Expansion on Dropout Rates

BACKGROUND This study investigates how the Medicaid Expansion of the Affordable Care Act affected state high school dropout rates. METHODS This study relies on a differences‐in‐differences estimation strategy that is common in program evaluation, especially in education. This method replicates in a regression framework a classic pre‐test post‐test comparison group quasi‐experimental design. The analysis is conducted at the state level, which reduces the precision of the estimates. RESULTS States that adopted the Medicaid Expansion had a 0.658 percentage point greater reduction in dropout rates than non‐Expansion states in the year of Medicaid implementation. A back‐of‐the‐envelope calculation suggests that if all the remaining non‐Expansion states adopted Medicaid, there would be a decrease of over 92,500 youths who drop out of high school, representing a drop of 11.2% in the number of dropouts in these states. CONCLUSION The Medicaid Expansion of the Affordable Care Act is more than just a health insurance program; it is a dropout prevention program.