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Public Health Insurance and Medical Spending: Evidence from the ACA Medicaid Expansion

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  • Cortnie Shupe

Abstract

This paper investigates the short-run impact of public insurance expansion under the Affordable Care Act on out-of-pocket medical spending (OOP) and risk exposure among low-income, eligible households as well as the incidence of the cost of providing insurance. Using data from the Medical Expenditures Panel Survey (MEPS), I exploit exogenous variation in Medicaid eligibility rules across states, income groups and time. I find that public insurance eligibility reduced mean OOP by 18.2% among targeted households, but it did not causally increase total expenditures among beneficiaries. Rather, Medicaid expansion shifted the burden of payment from eligible households and private insurance (17% reduction) to taxpayers in the form of public insurance (45.7% increase). The efficiency of these public funds can be summarized by a Marginal Value of Public Funds ranging from 0.06 to 0.59 that is highest for households with at least one pre-existing condition.

Suggested Citation

  • Cortnie Shupe, 2021. "Public Health Insurance and Medical Spending: Evidence from the ACA Medicaid Expansion," CESifo Working Paper Series 8827, CESifo.
    • Handle: RePEc:ces:ceswps:_8827
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    References listed on IDEAS

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    More about this item

    Keywords

    public health insurance; risk protection; MVPF; Medicaid; out-of-pocket expenditures; Affordable Care Act;
    All these keywords.

    JEL classification:

    • D04 - Microeconomics - - General - - - Microeconomic Policy: Formulation; Implementation; Evaluation
    • D61 - Microeconomics - - Welfare Economics - - - Allocative Efficiency; Cost-Benefit Analysis
    • H44 - Public Economics - - Publicly Provided Goods - - - Publicly Provided Goods: Mixed Markets
    • I13 - Health, Education, and Welfare - - Health - - - Health Insurance, Public and Private

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