Migrating to Medicaid? The Potential Spillover Effects of Expanding Medicaid Under Health Reform
Aaron L. Schwartz and Benjamin D. Sommers
Starting in 2014, many low-income residents of states that forgo the Medicaid expansion of the Affordable Care Act (ACA) will be eligible for that program if they move to another state. This raises the possibility that states expanding coverage may experience greater than expected costs due to in-migration of poor beneficiaries from nearby states. Thus, states may have rational concerns of becoming “welfare magnets” that attract the migration of new beneficiaries if they expand Medicaid but other nearby states do not. If the implementation of the ACA does induce selective migration, such movement could also serve as an alternate mechanism for increasing insurance coverage. However, there is little existing research on whether low-income adults migrate to states based on the availability of subsidized insurance coverage.
Using the 1998-2012 Current Population Survey, we examine whether recent public insurance expansions in Arizona, Maine, Massachusetts, and New York induced migration of potential beneficiaries to those states. Specifically, we examine the interstate in-migration and out-migration of non-elderly adults with incomes below 200% of federal poverty in expansion and matched control states (New Mexico and Nevada for Arizona, Pennsylvania for New York, New Hampshire for Maine, and Connecticut and Rhode Island for Massachusetts). Difference-in-difference regressions of in-migration and out-migration include individual-level covariates (age, sex, marital status, family size, education, race, ethnicity, and parental status), and lagged time-varying state-level covariates (the unemployment rate and median income). These analyses yield no evidence that insurance expansions induced interstate migration of low-income adults. These results are robust across subsamples of low-income adults, including adults who were childless, in fair or poor health status, or below the Medicaid income eligibility cutoff for the ACA. Event study analysis indicates no evidence of immediate, anticipatory, or lagged effects. Our preferred estimate is precise enough to rule out net migration into expansion states of more than 1,300 people per year, or 0.27% of the state Medicaid population.
Roughly half of US states have decided to forgo the ACA Medicaid expansions as of November 2013. The considerable regional clustering of these decisions is consistent with prior research demonstrating regional spillovers in state welfare decisions. Our findings suggest that rational anticipation of costly beneficiary migration is unlikely to explain the prevalence and regional clustering of states’ decisions to reject the ACA expansion. Although there are important distinctions between the ACA and the policies we examine, our null result implies that migration will not be a common way for people to obtain Medicaid coverage under the current expansion, and that interstate migration is not likely to be a significant source of costs for states choosing to expand their programs.