The Effect of Public Health Insurance on Individual Consumption: Evidence from Medicaid Expansion

42 Pages Posted: 14 Feb 2024 Last revised: 26 Apr 2024

See all articles by Allen Hardiman

Allen Hardiman

University of Illinois at Urbana-Champaign

Date Written: April 8, 2024

Abstract

This paper examines the impact of the Affordable Care Act Medicaid expansion on individual consumption by leveraging nationally representative panel data of near-elderly adults in the United States. I take advantage of the panel structure to control for unobservable differences across individuals and to identify individuals who are more likely to be impacted by the expansion ex-ante. Using a difference-in-difference approach, I find that the ACA Medicaid expansion increases total monthly consumption by $144.13, which is equivalent to a 14.4 percent increase from the pre-expansion mean. This growth in total consumption is driven primarily by a rise in non-durable spending and housing consumption. Additionally, I observe that individuals in expansion states are 3.9 percentage points more likely to be homeowners than those in non-expansion states. These effects are driven by a reduction in out-of-pocket medical spending and an improvement in financial well-being.

Keywords: Medicaid Expansion, Affordable Care Act, Consumption

JEL Classification: I13, I18, I31, I38

Suggested Citation

Hardiman, Allen, The Effect of Public Health Insurance on Individual Consumption: Evidence from Medicaid Expansion (April 8, 2024). Available at SSRN: https://ssrn.com/abstract=4722128 or http://dx.doi.org/10.2139/ssrn.4722128

Allen Hardiman (Contact Author)

University of Illinois at Urbana-Champaign ( email )

601 E John St
Champaign, IL Champaign 61820
United States

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