Is Mental Health Treatment Worth The Cost?
It is evident to many that mental health must play a role in the proclivity of crime. However, measuring its precise causal role is an extremely difficult task, due to the myriad of confounding variables that need to be untangled. Even a randomized control trial, the gold standard for science, would require immense resources and many years of tracking participants to answer this question.
Fortunately a pioneering Economist at Northwestern University, Elisa Jacome, has been able to tackle this question using rigorous analysis of observational data. Jacome used detailed administrative data from the State Government of South Carolina to link an individuals’ access to mental health care with their criminal records and mental health histories.
South Carolina is one of 10 states that drastically decreases Medicaid coverage for low income adults when they turn 19 years old. Jacome uses this point in time to center her analysis, using the 19th birthday as a “quasi-experimental variation” to measure the effect of losing Medicaid (and mental health treatment) on subsequent outcomes. She uses the group of individuals who are low income but not in Medicaid as a control, and those who are low income but enrolled in Medicaid as the treatment, to calculate the difference in incarceration rates before and after these groups turn 19.
She found that losing Medicaid led to an increase in incarceration by the 21st birthday by a staggering 16%. Even more startling, among those with histories of mental illness, losing Medicaid coverage increased incarceration rates by 40%. To put these magnitudes into perspective, other researchers have estimated that one extra year of schooling reduces men’s likelihood of incarceration by approximately 10%.
Overall, this study does a convincing series of analyses to demonstrate that the termination of Medicaid leads to men with mental illness becoming incarcerated by a significant margin.
But what does this mean in terms of costs and benefits?
The cost of enrolling all low income 19-year-old men in South Carolina in two additional years of Medicaid would be $15 Million. On the other hand, the total economic and social valuation of the benefits from fewer victimizations and incarcerations could be conservatively estimated at $27.3 Million. This gives a cost benefit ratio of 1.87:1 for society, which is corroborated by other work, (Arnberg, Neller & Strippling 2024).
It is worth reiterating that these are conservative estimates for each piece of the puzzle, and these effects do not include the broader health benefits of being on Medicaid, which would be required for a more complete quantification of the Medicaid program’s benefits.
Lumiya can help quantify the benefits of policy initiatives like increasing the age limit for Medicaid, presenting a clear win for governments and its citizens. This type of analysis can be extended to other health policies, such as telemedicine, nutrition training, and access to reproductive care.
References
Arenberg, Samuel, Seth Neller, and Sam Stripling. "The impact of youth Medicaid eligibility on adult incarceration." American Economic Journal: Applied Economics 16.1 (2024): 121-156.
Jácome, Elisa. "Mental health and criminal involvement: Evidence from losing medicaid eligibility." Job Market Paper, Princeton University (2020).
Lochner, Lance, and Enrico Moretti. "The effect of education on crime: Evidence from prison inmates, arrests, and self-reports." American economic review 94.1 (2004): 155-189.
