Abstract
This study estimates the effect of county‐level public health expenditures in reducing county‐level public assistance medical care benefits (public assistance medical care benefits is a measure compiled by the US Bureau of Economic Analysis and includes Medicaid and other medical vendor payments). The effect is modeled using a static panel model and estimated using two‐stage limited information maximum likelihood and a valid instrumental variable. For every $1 invested in county‐level public health expenditures, public assistance medical care benefits are reduced by an average of $3.12 (95% confidence interval: −$5.62, −$0.94). Because Medicaid in California is financed via an approximate 50% match of federal dollars with state dollars, savings to the state are approximately one‐half of this, or $1.56 for every $1 invested in county‐level public health expenditures.
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