Medicaid Expansion Under the Affordable Care Act Increased Formal Long-Term Care Use

The Affordable Care Act (ACA) increased health insurance coverage for 20 million Americans, with much of these gains occurring through expansion of the state-administered Medicaid program (Sommers et al 2017). Although Medicaid expansion has been shown to increase access to health services and the quality of medical care delivered (Mazurenko et al, 2018), little is known about its effects on individuals’ use of long-term care (LTC). This relationship is important because Medicaid finances 50% of all LTC in the U.S. and nearly two-thirds of all Medicaid spending focuses on older and disabled adults (Grabowski et al, 2017). Furthermore, the populations most likely to use Medicaid LTC were exempted from ACA Medicaid expansion—disabled individuals and those ages 65+ were required to obtain Medicaid eligibility under pre-ACA rules. As such, Medicaid expansion may have directly increased access to LTC for younger, non-disabled adults, while indirectly increasing use among older and/or disabled adults due to welcome mat effects or global increases in state Medicaid budgets.

This study uses state-level variation in the decision to implement ACA-funded Medicaid expansion to provide the first evidence about the direct effects on LTC use. The sample includes Health and Retirement Study respondents age 50 and older who were residing in the community in 2012 and appeared in at least one post-ACA wave. The difference-in-difference design compares LTC use in 2014 and 2016 for individuals residing in 20 states that expanded in 2014 compared to individuals residing in 22 states that did not expand during the study period. We isolate direct effects of Medicaid expansion by examining those likely to gain Medicaid coverage through the ACA (FPL<138% and age<65). We obtain indirect policy effects by examining individuals age 65+, with income above 138% FPL, or disabled individuals at the time of expansion.

In 2014, 16 % of the 16,737 respondents had household incomes 138% below FPL. 36% of respondents were 64 or younger. The average age overall was 68, 67% White, 52% were female, and 81% completed high school. Pre-ACA LTC use patterns were similar across Medicaid-expansion and non-expansion states. Low income, non-elderly adults who lived in an expansion state experienced a 11.5 point increase in probability of Medicaid coverage post-ACA compared to those who lived in a non-expansion state. Living in an expansion state was not predictive of Medicaid coverage for individuals with incomes above 138% FPL or those age 65+. Difference-in-difference model estimates indicate that ACA caused a 1.9 point increase in the probability of all-cause nursing home use for non-elderly, lower income respondents, from a base of almost 1%. ACA did not affect home health or informal care use. Examining older or higher income individuals, the difference-in-difference estimates provide no evidence of an indirect effect of ACA on formal or informal LTC use.

ACA has been shown to increase health care access, use, and health outcomes. This paper provides the first evidence that ACA directly increased nursing home use. Extensions will examine whether the increase is from post-acute or custodial nursing home care changes.