Medicaid Expansion Tied to Coverage Access, Lower State Spending

August 31, 2021 - Medicaid expansion states have experienced higher access to health insurance coverage and lower state Medicaid spending, a report from the Menges Group found.

The researchers compared Medicaid expansion states and nonexpansion states, using data from the Centers for Disease Control and Prevention (CDC) and the US Bureau of Labor Statistics. By the end of the time period that the researchers analyzed (2014 through 2019), 37 states and the District of Columbia had adopted Medicaid expansion

The analysis focused primarily on four outcomes to assess the impact of Medicaid expansion programs: healthcare coverage access, state, federal, and overall Medicaid costs, the death rate of beneficiaries under the age of 65, and employment and unemployment rates.

Access to coverage

Over nine million individuals gained coverage due to Medicaid expansion between 2014 and 2019, the researchers found. These nine million new enrollees who came out of uninsurance and into Medicaid coverage represented a 47 percent drop in uninsurance from 2013 to 2019 in expansion states. 

In the Medicaid expansion states, 96 percent of enrollees were newly eligible for Medicaid coverage due to the expansion. Of the nine million new Medicaid enrollees, approximately two to three million would have been eligible for employer-sponsored health insurance. The majority of the new enrollees only had coverage because of Medicaid expansion, the researchers said.

READ MORE: How Medicaid Expansion Impacted Coronavirus Uninsurance Rates

Nonexpansion states also saw a drop in uninsurance during this timeframe, though it was a much smaller shift than in the expansion states. Around 3.4 million individuals transitioned from uninsurance into Medicaid coverage in nonexpansion states at the time, representing a 21 percent drop in uninsurance in that group.

Previous studies have suggested that broader adoption of Medicaid expansion could have reduced coronavirus-related uninsurance.

Medicaid spending

The increase in Medicaid spending was higher in states that had not expanded their Medicaid programs than in states that had expanded their Medicaid programs.

In states that had not expanded their Medicaid expansion programs, the state Medicaid spending rose 26.4 percent in the study time period.

States that had adopted Medicaid expansion also saw their Medicaid spending increase, however, it did not rise as much as it did in nonexpansion states. Medicaid expansion states experienced a 19.5 percent increase in their Medicaid spending in the several years that the researchers analyzed.

READ MORE: Medicaid Expansion Decreased Surgical Catastrophic Spending

The researchers pointed out that the Medicaid expansion states saw a lower increase in healthcare spending over the course of the analysis despite covering a broader population of beneficiaries.

That being said, Medicaid expansion poses a high price tag overall. Taxpayers covered around $80 billion for Medicaid expansion programs overall in 2019 alone or about $418 per adult worker nationwide. Much of this expenditure may not show up in the state spending metric because, in some states, federal matching covers a significant share of Medicaid spending.

Over the course of the 2013 to 2019 time period that this study observed, Medicaid spending nationwide increased by 37.9 percent.

These results are important because a common argument from opponents of Medicaid expansion is that it will dramatically increase state spending.

Death rate of beneficiaries

The difference in death rates between Medicaid expansion states and nonexpansion states was insignificant. Specifically, cancer death rates showed no real differences. However, the difference in coronavirus-related deaths was significant, with beneficiaries in Medicaid expansion states faring better than those in nonexpansion states.

READ MORE: Missouri Medicaid Expansion Disrupted Due to Legal Roadblock

The researchers compared the death rate before the Affordable Care Act’s implementation to the death rate after implementation in both Medicaid expansion states and nonexpansion states. 

In Medicaid expansion states, the overall mortality rate for individuals between 18 and 64 years of age was 5.8 percent higher after the Affordable Care Act’s implementation. In nonexpansion states, the overall mortality rate was 4.8 percent higher.

Among beneficiaries 65 and older, Medicaid expansion states saw a decrease of 8.5 percent in the mortality rate after 2013. Nonexpansion states experienced a 7.5 percent decline post-Affordable Care Act implementation.

The coronavirus-related death rate among 18 to 64-year-olds was 10.1 percent lower in expansion states than in nonexpansion states, as of May 2021.

“The death rate differential suggests that Medicaid Expansion coverage could have been beneficial in averting COVID deaths in the Medicaid Expansion states,” the researchers noted.

Unemployment, employment rates

Medicaid expansion had a minimal impact on employment levels and, when it did have an effect, the result was usually positive. The researchers used six different methods to analyze Medicaid expansion’s impact on employment and all methods came to the same conclusion.

The researchers noted that the Medicaid expansion states' unemployment rates collectively were worse than the nonexpansion states before the Affordable Care Act’s implementation. Even though expansion states started at a disadvantage, they achieved lower unemployment than nonexpansion states did after 2013, dropping 3.8 percentage points compared to nonexpansion states’ 3.5 points.

Bankruptcies declined in all states during this period, but particularly in Medicaid expansion states. Additionally, hospitals saw gains in revenue in Medicaid expansion states.

Previous studies have likewise touted the potential economic benefits of Medicaid expansion.