They Use More Health Care Resources or Less? The Effect of Early Medicaid Expansion on the Heath Care Utilization and Health of Previously Medicaid Eligible Groups

This study examines the change in medical care use and health patterns of Medicaid eligible children and parents with dependent children after the early Medicaid expansion for adults in 2010. Some previous literature has pointed out that health insurance expansion for parents have a positive spillover effect on children. Children with family based health insurance that also covers their parents, used more preventive care and health care resources than children covered by children-only health insurance (Davidoff, Dubay, Kenney, Yemane, 2003; Gifford, Weech-Maldonado, and Short, 2005). But how about expansion to cover other adults? Do previously Medicaid eligible parents and their children use more health care resources because of the peer effect (e.g. parents are encouraged to use more resources when their friends also enroll in the program) when more adults could be covered by Medicaid after expansion? Or would they use less health care because of crowding out when more people consume the resources?

Beginning from 2010, there were 5 states (CA, CT, MN, NJ, and WA) and D.C. expanded their Medicaid to cover low-income adults, either through a Section 1115 waiver or under the ACA. In this study, I use the Survey of Income and Program Participation (SIPP) panel data from 2009 to 2011 to compare the health care utilization and health conditions of Medicaid eligible parents and children in expansion states with those in non-expansion states.   

Other than using state fixed effects to control for invariant state characteristics and year fixed effects to control for the time trend, this study also uses simulated eligibility to control for potential endogeneity bias, in which the error term is correlated with the predictor and maybe the outcomes of interest (e.g. economic recession may affect more people to be eligible for Medicaid and also how they use the medical care resources or their health status). The simulated eligibility is an instrument that simulated the eligibility of each individual. It is a ratio of the number of simulated eligible individuals to a fixed population in each state. The ratio represents the generousity of a state Medicaid program. The higher the ratio, the more generous the state Medicaid to cover low-income adults (Curri & Gruber 1996, Gruber & Simon, 2007).

The preliminary results of this study indicate that the early Medicaid expansion for adults is not consistently associated with an increase or decrease in medical care use and health of parents and children. Even though children with Medicaid spent fewer nights in hospital, there is no significant increase in physician visits or dental visits for both parents and children. However, the results do show a significant direct effect of Medicaid expansion on the dental visits and health status of non-disabled childless adults. The non-disabled childless adults reported that they have healthier conditions and fewer sick days after expansion. This may be because more low-income healthy adults were eligible for Medicaid after expansion.