Medicaid versus Private Coverage for Low-Income Families: What are the Tradeoffs between Cost-Sharing and Access to Care?

Not all health insurance is created equal. Medicaid typically provides coverage with little or no patient cost-sharing, while private plans may expose patients to high out-of-pocket spending. On the flip side, not all providers will accept Medicaid patients, so that access to providers may be better with private coverage. We evaluate the pros and cons of Medicaid versus private coverage for low-income families using a regression discontinuity design (RDD). The RDD exploits the sharp cutoff in Medicaid eligibility in many states at 138% of the federal poverty level (FPL) as a result of the Affordable Care Act. For these states, we estimate a sharp decline in Medicaid coverage and a corresponding increase in private non-group coverage at the 138% FPL cutoff, with no change in overall insurance coverage. Therefore, any outcome changes at the 138% FPL cutoff should be interpreted as the result of a change in the source of insurance, from public to private. We find a sharp increase in out-of-pocket medical spending at the cutoff, driven by premium payments. In contrast, there is no change in self-reported health or in the take-up of other public benefits, an issue of concern for some states that chose not to expand Medicaid. Future work will use restricted data from the Medical Expenditure Panel Survey (MEPS) to contrast these increases in personal spending with changes in access to care.