The Benefits to Taxpayers from Increases in Students - RAND ...

44 The Benefits to Taxpayers from Increases in Students’ Educational Attainment
vices (Table 4.1). We again use a two-part model for each program. In the first stage,
we use the SIPP data to model program utilization (i.e., use of outpatient services) as a
function of educational attainment, age, and other demographic characteristics. In the
second stage, for those who have used either program, we model hospitalization (i.e.,
use of inpatient services) as a function of education level, age, and other variables.
For subsidized housing, we use HUD data on total annual program cost and
number of residents covered. We assume that unit housing cost per person is constant
across education levels and demographic groups. This makes a single-part model, in
which housing-subsidy utilization depends on education level, age, and other variables,
sufficient. Then, the expected housing subsidy is equal to the likelihood of utilization,
as predicted by the single-part model, times the average program cost per person.
Three of the programs—SSI, Social Security, and Medicare—each include two
components, one addressed to the disabled and the other to the elderly. Accordingly,
we conducted separate analyses for younger and older subpopulations in analyzing the
effects of educational attainment on program benefits.
Findings related to each social program are provided below, along with a brief
description of each of the programs. To illustrate the results, we show the effects of
increased educational attainment on social program costs for U.S.-born Hispanic
women. The details of our analyses of these programs are provided in Appendix C.
It describes the data sources, economic models, and the empirical estimations. It also
discusses some caveats related to the research methods.
Effects of Educational Attainment on the Costs of Welfare Programs
For the purposes of this study, “welfare programs” include Temporary Assistance to
Needy Families, general assistance, and other similar assistance programs for the needy.
Table 4.1
Medicare and Medicaid Benefit Estimates, 2002
Payments
($ billion)
Beneficiaries
($ million)
Benefit per
Beneficiary ($)
Medicare
Inpatient 123.0 7.8 15,694
Outpatient 92.4 31.5 2,934
Medicaid
Inpatient 57.5 5.0 11,401
Outpatient 49.1 24.4 2,016
NOTE: Medicare data use calendar year; Medicaid data use fiscal year.
SOURCE: U.S. Department of Health and Human Services, Centers for Medicare
and Medicaid Services (2006).