Losing Medicaid: What happens to hospitalizations?

Abstract

There is substantial evidence on the impact of gaining insurance on healthcare service utilization and financing. Less is known about the effects of losing insurance. We study a large-scale and sudden Medicaid eligibility contraction in Tennessee in August 2005 to understand the impacts of losing Medicaid on the use and financing of hospitalizations. The use of Medicaid as the expected payer for hospitalizations fell by 27.6%, with some offsetting through other payers. The findings also suggest a 4.6% decline in overall hospital service utilization in Tennessee, though this coefficient estimate is only marginally statistically significant. These findings indicate that the substantial Medicaid coverage losses projected under recent federal legislation are likely to affect hospital care and its financing among Americans with lower incomes who rely on this program for insurance coverage.