The Effect of Insurance Expansions on the Already Insured

The Affordable Care Act (ACA) has expanded health insurance coverage by over 10 million individuals (Gallup-Healthways Well-Being Index), and the Congressional Budget Office predicts that an additional 10 million will gain coverage over the next two years. These historic expansions in insurance coverage have generated concerns that the health care system does not have sufficient capacity to meet this new demand. This concern is especially acute for the 1 in 5 Americans living in areas experiencing health professional shortages and for those living in areas where the increase in coverage is expected to be particularly large. In these areas, the large increase in the demand for health care may outstrip the supply of such services, resulting in “negative spillovers” on those who are already insured in the form of longer wait times, less access to care, and worse health outcomes. Alternatively, it may be the case that physicians are largely able to meet this new demand by seeing more patients or changing the way they practice; for example, by making greater use of physician extenders such as nurse practitioners. The extent of these spillovers has important implications for health policy. However, despite the importance of this question, there is almost no empirical evidence on the relationship between health insurance coverage expansions and spillovers onto the already-insured population, representing a critical gap in our understanding of health care reform and its implications.

In this project, we examine how the ACA coverage expansions affected the access to and use of care of those already insured using a large panel of Medicare claims data. Medicare beneficiaries are an ideal population to study to evaluate spillover effects for several reasons. First, Medicare primarily covers the elderly who have a high need for health services, so this group is especially vulnerable to any reductions in access that may result from negative spillovers. Second, these data contain panel information on enrollees and detailed geographic information, allowing the analysis to focus on individuals who have been differentially affected by the expansions due to whether or not they live in a Medicaid expansion state.

We compare Medicare beneficiaries living in counties bordering expansion and non-expansion states to evaluate the extent to which these expansions generated negative spillovers. We find no effect of the Medicaid expansions on the use of care among Medicare beneficiaries, and our point estimates are sufficiently precise to reject meaningfully sized negative spillovers. We also investigate how providers altered their practice patterns in response to the Medicaid expansions and find some evidence that they made greater use of nurse practitioners following these expansions.