Cash Welfare and Health Spending

Abstract

I explore the interplay between cash welfare and health-related outcomes using Canadian administrative data. Healthcare use rises sharply before a welfare application, especially for plausibly work-limiting diagnoses, then partially normalizes within three years. Using application adjudicators’ decisions as "judge IVs", I estimate that welfare receipt has limited effects on subsequent health-related outcomes. Because Canadian healthcare is free and universal, these findings are unrelated to health insurance. An exception is pharmaceuticals, which are free for welfare recipients but not for non-recipients — consistent with this, welfare receipt strongly increases pharmaceutical use, implying that incomplete insurance limits medication among those excluded from welfare.