Panel Paper: The Effect of ACA State Medicaid Expansions on Medical out-of-Pocket Expenditures

Saturday, November 5, 2016 : 1:45 PM
Columbia 2 (Washington Hilton)

*Names in bold indicate Presenter

Joelle Abramowitz, U.S. Census Bureau


This paper considers the effect of the Patient Protection and Affordable Care Act (ACA) state Medicaid expansions on medical out-of-pocket expenditures.  Beginning in 2010, the ACA provided additional federal financing to states for extending Medicaid coverage to non-elderly adults with income up to 138 percent of the federal poverty level (FPL).  As of March 2016, 32 states including the District of Columbia adopted these expansions.  

Prior to implementation of the ACA state Medicaid expansions, the effects on medical out-of-pockets expenditures were unclear.  Previously uninsured individuals may see no change or an increase in out-of-pocket premium expenses, while those previously insured under private plans may see decreases.  The expansions may also affect both the out-of-pocket cost of care as well and the utilization of care.  For a given level of medical care utilization, Medicaid expansions should result in lower expenditures through lower out-of-pocket costs of medical care.  However, decreases in the out-of-pocket cost of care may then lead to increases in utilization of care, both as a result of prior unmet need as well as overconsumption of care, and these could lead to an increase in out-of-pocket expenditures for medical care. 

The effects of the expansions on medical out-of-pocket expenditures may differ over the short and long terms.  In particular, out-of-pocket expenditures for medical care may change over time.  In the short run, covered individuals may seek more care and have increased expenditures for medical care.  However, if seeking care results in improved health, they may need to seek less care and experience a decrease in expenditures over the longer term.

Given the many forces at work and the important policy and health implications, analysis of the effect of state Medicaid expansions on medical out-of-pocket expenditures is valuable.  To examine this question, this analysis uses data from the 2011-2015 Current Population Survey Annual Social and Economic Supplement covering the 2010-2014 calendar years.  The analysis compares expenditures for the 2014 calendar year, the year many state Medicaid expansions were implemented, to the period before the expansions, covering the 2010-2013 calendar years.  Using a difference-in-differences framework, the analysis examines effects of the Medicaid expansions separately for out-of-pocket expenditures on health insurance premiums and for non-over-the-counter medical care and products.  The main analysis examines expenditures for childless non-elderly adults and performs separate analyses for individuals with family income below 100 percent of the FPL, between 100 percent and 138 percent of the FPL, and above 138 percent of the FPL.

Preliminary results suggest that, for childless non-elderly adults with family income below 100 percent of the FPL, state Medicaid expansions were associated with increases in the proportions with zero premium expenditures and with high expenses for non-over-the-counter medical care and products, defined as greater than the ACA out-of-pocket maximum limit.  For childless non-elderly adults with family income between 100 percent and 138 percent of the FPL, results further suggest state Medicaid expansions were associated with increases in the proportions with zero premium expenditures and with zero expenditures for non-over-the-counter medical care and products.