Panel Paper: The Value of Medicaid Vs. Marketplace Health Insurance for Low-Income Families

Thursday, November 7, 2019
I.M Pei Tower: Terrace Level, Terrace (Sheraton Denver Downtown)

*Names in bold indicate Presenter

Marguerite Burns, University of Wisconsin, Madison and Laura Dague, Texas A&M University

Whether public or subsidized private insurance is the most cost-effective way to deliver health care services to low-income families is of substantive interest in both the health economics literature and the policy world. A crucial question in understanding the best way to deliver health insurance coverage and in assessing alternative Medicaid expansion models is whether those who would have enrolled in Medicaid will instead take up private insurance or will go uninsured. While both Medicaid and ACA Marketplace plans provide health insurance coverage, Marketplace-based plans may differ substantially from Medicaid in features related to health care use and downstream health outcomes including benefit packages, provider networks and cost sharing. Unfortunately, little evidence exists to inform state and federal policymakers of the relevant tradeoffs involved in providing fully subsidized public coverage relative to partially subsidized private coverage. In this paper, we provide the first evidence on how low-income individuals who might be eligible for either subsidized private coverage through Marketplace or Medicaid navigate the post-ACA health insurance landscape. We study the natural experiment created by Wisconsin’s April 2014 elimination of Medicaid eligibility for parents with incomes between 100 and 200% FPL, who were encouraged to instead enroll in federally subsidized Marketplace plans. This creates a plausibly exogenous shock to Medicaid and subsidized private coverage access, which we use to study health insurance enrollment, continuity of coverage, and access to health care. In an important innovation in studying transitions across health insurance plans, we take advantage of a data source not typically used to study Medicaid enrollment policy and unavailable in most states: comprehensive all-payer claims data. We implement an event study analysis that leverages the fact that the shock to coverage occurred suddenly and was not simultaneous to any other changes in eligibility policy for this group, resulting in more than 50,000 people suddenly losing Medicaid coverage from one month to the next. We augment the event study with comparisons to groups that were not affected by the eligibility change and also examine cohorts with similar, but potentially endogenous, coverage disruptions in the years prior to and after the event. Our paper provides new evidence on how individuals value public relative to private health insurance coverage, and how they fare with respect to health care access under public and private coverage.