The Effect of State Medicaid Expansions on Prescription Drug Use

This study provides estimates of the impact of the 2014 Affordable Care Act (ACA) Medicaid expansions on aggregate prescription drug utilization within the Medicaid program. Beginning in 2010, the ACA provided additional federal financing to states for extending Medicaid coverage to non-elderly adults with income up to 138 percent of the federal poverty level. As of October 2015, 31 states including the District of Columbia have adopted these expansions, though some expanded before 2014 and others not until late 2014 or 2015. ACA Medicaid enrollees, most of whom were previously uninsured, are likely to have unmet health care needs; thus, coverage gains under the expansion may lead to higher utilization of medical care than among other populations.

We study the experiences of the 23 states that implemented their Medicaid coverage expansions in early 2014, comparing them to the 20 non-expansion states.  We use prescription drug data covering 2013-2015 from a large national dataset of all-payer prescription drug claims. Within states that expanded, we explore heterogeneity in response across geographical areas that differ by prevalence of uninsurance prior to the policy change.  Lastly, we also examine patterns of utilization changes in different drug classes.

We find that within the first 15 months of implementation, the Medicaid expansion increased Medicaid prescription drug utilization by 18 percent in expansion states relative to non-expansion states.  Increases in prescription drug utilization within states were largest in areas with higher baseline uninsured rates, where the potential coverage gains from the Medicaid expansion are largest.

Our analyses of utilization across different medication classes demonstrated statistically significant increases in utilization across all drug classes, but with relatively larger effects for certain classes, particularly those relevant to common chronic medical conditions. In comparison to the overall 18 percent increase in aggregate Medicaid prescription drug utilization, medications used for treating diabetes accounted for the largest growth among all the classes, with an increase of 24 percent.  There was a 21 percent increase in utilization of cardiovascular medications (those for high blood pressure, high cholesterol, and heart disease), a 21 percent increase in contraceptive use, and a 19 percent increase in utilization of psychotherapeutic medications such as anti-depressants.  The use of respiratory/allergy medications, antibiotics, and gastrointestinal medications, which are more commonly taken for shorter-term acute conditions than the other drug classes, increased less than overall drug spending, with growth rates ranging from 14 to 16 percent.  Taken together, this suggests that Medicaid expansion was particularly effective at increasing prescription drug utilization for common and potentially costly chronic conditions such as diabetes, high blood pressure, and depression.