Medicaid Expansion, Crowd-Out, and Emergency Department Utilization: Evidence from California's Bridge to Reform Medicaid
75 Pages Posted: 4 Aug 2018 Last revised: 26 Nov 2018
Date Written: July 16, 2018
A common policy proposal to address the over-use of emergency departments by the uninsured is expanding public insurance. However, these expansions are not limited to the previously uninsured; crowding-out of private health insurance also occurs. The effect on emergency department utilization following an expansion in public insurance will be largely determined by the makeup of the newly covered population. Consideration of only one avenue will lead to an inaccurate interpretation of how expanding public insurance to the uninsured impacts emergency department utilization by the previously uninsured. Yet, the two streams of current literature -- the expansionary and crowding-out avenues -- have yet to cross. This paper is an effort to fill that gap. Using the Low Income Health Program (LIHP) and subsequent Affordable Care Act (ACA) Medicaid expansions in California, we examine how the prior insurance status of the newly eligible Medicaid population impacts emergency department usage. Employing hospital-level data from 2006 through 2016, we estimate (1) a binary difference-in-difference model, (2) a continuous treatment difference-in-difference model where our treatment is the number of newly eligible and enrolled in Medicaid, and (3) a continuous difference-in-difference model with two treatment effects: the estimated number of newly enrolled who were previously uninsured vs. those previously privately insured. We find that emergency department visits increased and that this increase is driven entirely by those who crowded-out from their private insurance. The increase in emergency department usage increased healthcare expenditures in California by $389.1 million per year.
Keywords: Crowd Out, Emergency Departments, Medicaid, Public Insurance
JEL Classification: I13, I18, I38, G22
Suggested Citation: Suggested Citation