The abstract of a paper by Amy Finkelstein, Nathaniel Hendren, and Erzo F.P. Luttmer reads,
We develop a set of frameworks for valuing Medicaid and apply them to welfare analysis of the Oregon Health Insurance Experiment, a Medicaid expansion for low-income, uninsured adults that occurred via random assignment. Our baseline estimates of Medicaid’s welfare benefit to recipients per dollar of government spending range from about $0.2 to $0.4, depending on the framework, with at least two-fifths – and as much as four-fifths – of the value of Medicaid coming from a transfer component, as opposed to its ability to move resources across states of the world. In addition, we estimate that Medicaid generates a substantial transfer, of about $0.6 per dollar of government spending, to the providers of implicit insurance for the low-income uninsured. The economic incidence of these transfers is critical for assessing the social value of providing Medicaid to low-income adults relative to alternative redistributive policies.
In plain English, this says that most of the benefit in Medicaid goes to the supply side, not to the recipients. The recipients would be better off with cash. I am sure that the same holds true for food stamps, housing subsidies, mortgage subsidies, and so on.
In the Public Choice theory of regulation, the theory of Bootleggers and Baptists holds that regulation is supported by naive do-gooders (the Baptists) and private interests (the Bootleggers). But non-cash assistance programs also fit that model. The naive do-gooders want to subsidize food or health insurance or housing for the poor. These Baptists are cheerfully joined (and ultimately the policies are dominated) by the Bootleggeres, which in this case are the suppliers of food or health insurance or what have you.
Did you see how much the stock prices of health insurance companies and hospitals shot up after the Supreme Court refused to strike down the Obamacare subsidies for states without exchanges?