Medicaid Expansion Spillover Effects on Health Care Consumption and Coverage: Evidence from Medicare Administrative Data

Abstract

The 2014 Medicaid expansion excluded Americans over 65, but they could still be affected via spillover effects. Using Medicare administrative data, we test for spillovers in Medicaid coverage and Medicare spending among Medicare beneficiaries. We analyze two separate birth cohorts: those under 65 in 2014, who could have been induced by the expansion to take up Medicaid before joining Medicare; and those 65 or older in 2014, whose Medicaid eligibility was never affected by the expansion. Our analysis shows that spillovers only flowed into the under-65 cohort, with Medicaid coverage increasing and average Medicare spending falling for this group, with little effect on health conditions. A lack of an effect on those over 65 in 2014 suggests Medicare beneficiaries were not crowded out of health care access by the expansion. Instead, those under 65 used Medicaid to satisfy “pent-up” demand, consuming care they would have otherwise consumed later under Medicare.

Keywords: Health Insurance, Medicare, Medicaid expansion, ACA, Spillovers