Medicaid expansions and private insurance “crowd‐out” (1999–2019)

Abstract

AbstractBackgroundRecent Medicaid expansions have rekindled the debate around private insurance “crowd‐out.” Prior research is limited by short‐time horizons and state‐specific analyses. Our study overcomes these limitations by evaluating 20 years of Medicaid expansions across the entire United States.MethodsWe obtain data from the U.S. Census Bureau for all U.S. states and District of Columbia for private insurance coverage rates of adults 18–64 for years 1999–2019. After estimating a naïve, staggered Two‐way fixed effects difference‐in‐differences regression model, we implement four novel econometric methods to diagnose and overcome threats of bias from staggered designs. We also test for pre‐treatment differential trends and heterogenous effects over time.ResultsOur findings suggest that Medicaid expansion was associated with a 1.5 percent‐point decline in private insurance rates (p < 0.001). We also observe significant heterogeneity over time, with estimates peaking 4 years after expansion.ConclusionsMedicaid expansions reduced private insurance rates. Future research should assess whether or how this crowd‐out may have affected consumer welfare or government budgets. Recognizing the crowd‐out should enable policymakers to make informed decisions regarding healthcare policy. The importance of a 1‐2 percent‐point crowd‐out, we leave for future research and debate.