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Adverse Selection in Medicaid: Evidence from Discontinuous Program Rules

Author

Listed:
  • Betsy Q. Cliff
  • Sarah Miller
  • Jeffrey T. Kullgren
  • John Z. Ayanian
  • Richard Hirth

Abstract

Recent expansions of Medicaid eligibility have come with increased experimentation with enrollee cost-sharing. In this paper, we exploit a discontinuous premium increase at the federal poverty level in Michigan’s Medicaid expansion program to test low-income individuals’ sensitivity to premiums using linked enrollment and claims data. At the cutoff, average premiums increase by $3.15 and the probability of disenrollment increases by 2.3 percentage points. Increased disenrollment occurs among those with fewer documented medical needs at baseline, but not among those with greater medical needs. These results suggest healthier low-income individuals may be sensitive to even modest health insurance premiums, and that premiums may induce adverse selection in Medicaid plans.

Suggested Citation

  • Betsy Q. Cliff & Sarah Miller & Jeffrey T. Kullgren & John Z. Ayanian & Richard Hirth, 2021. "Adverse Selection in Medicaid: Evidence from Discontinuous Program Rules," NBER Working Papers 28762, National Bureau of Economic Research, Inc.
    • Handle: RePEc:nbr:nberwo:28762
    Note: EH
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    More about this item

    JEL classification:

    • I1 - Health, Education, and Welfare - - Health
    • I12 - Health, Education, and Welfare - - Health - - - Health Behavior
    • I13 - Health, Education, and Welfare - - Health - - - Health Insurance, Public and Private

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