The Impact of State Medicaid Expansions on Poverty

Medicaid Expansions have increased health insurance coverage, decreased financial distress, increased self-reported health status and reduced out-of-pocket medical expenditures, but have not reduced employment. We estimated the impact of Medicaid expansion on health-inclusive poverty—a poverty measure that treats basic health insurance as an explicit need and counts health insurance benefits as resources to meet that need (Korenman & Remler 2016; Remler, Korenman & Hyson 2017). In contrast, the official poverty measure cannot validly estimate an impact of health insurance benefits (National Academy of Sciences 1995) and the supplemental poverty measure (SPM) can estimate the impact due to only reduced out-of-pocket expenditures but not increased access to care.

We estimated cross-sectional differences in 2015 between Expansion and Non-Expansion states in rates of poverty and deep poverty, for both the health-inclusive poverty measure (HIPM) and SPM. We estimated impacts using cross-sectional logistic regression and linear probability models, unadjusted, adjusted for only demographics and Silver plan premiums and adjusted also for the distribution of non-health resources relative to needs. (Non-health resources are cash income, after taxes, tax-credits and work expenses, plus non-health in-kind benefits.) We used the Current Population Survey, weighting all analyses and correcting inferential statistics for complex survey sampling. Our main estimates defined Expansion states as those that fully expanded Medicaid on or before January 2015, but alternative calculations compare earlier expander, 2014 expanders and non-expanders. We present results for those under-age-65, not imputed to be undocumented and not in a household with a disabled person.

The SPM poverty rate, which accounts for only out-of-pocket expenditures on care and insurance, is 0.7 points lower in Expansion states (not statistically significant). Accounting for health insurance needs and benefits, expansion states have HIPM poverty rates a statistically significant 2.0 % percentage points lower (14.6% vs. 16.6%).

Expansion and non-expansion states are well balanced in characteristics likely to drive health-inclusive poverty, except for race/ethnicity, education and housing costs. Crucially, the distributions of non-health resources relative to needs thresholds, the main driver of HIPM poverty other than health insurance, is balanced between expansion and nonexpansion states, on average. The estimated expansion impacts on the HIPM are: 2.0 percentage points, unadjusted; 0.9 percentage points, adjusting for demographics and health insurance premiums; and 1.6 percentage points, adjusting also for resources relative to needs (a 9.6% reduction). All results are statistically significant. Expansion also reduces deep poverty rates by 1.6 percentage points, a 21% reduction.

For non-Hispanic Blacks, Hispanics, children, those aged between 55 and 64, and those in households with a head having less than high-school education, Medicaid expansion reduced (adjusted) health-inclusive poverty by at least 10% and reduced deep poverty by at least 20%.

These impacts should be born in mind as more states consider expanding Medicaid.