Medicaid Expansion Shifts Services Away From the Most Vulnerable

Charles Blahous and Liam Sigaud of the Mercatus Center document a negative consequence of Medicaid expansion.

Medicaid expansion under the Affordable Care Act (ACA) is generally associated in expansion states with a shift of program financial resources away from children toward nonaged nondisabled adults. We examine Medicaid expenditures per capita for beneficiary categories including children, aged adults, and the disabled, as well as for nonaged nondisabled adults, who were the focus of the ACA’s Medicaid expansion. We compare the growth of per capita expenditures on these groups from fiscal year (FY) 2013 to FY 2019 between states that chose to expand Medicaid on January 1, 2014, and states that had not expanded at the time data were collected. Nonexpansion states exhibited a remarkable stability in the distribution of program resources between these categories, with each category receiving nearly the same percentage of Medicaid financial resources in FY 2019 as in FY 2013. After controlling for changes in the beneficiary population within expansion states, we find that per capita spending growth on Medicaid’s previously eligible population was largely similar for expansion states and nonexpansion states but that this overarching similarity masked significant shifts of program financial resources between more specific beneficiary categories within expansion states. The most striking of these shifts was a dramatic shift of financial resources away from children in expansion states. States that expanded Medicaid per the terms of the ACA spent only 5.9% more per capita on children in FY 2019 than they did in FY 2013 compared with growth of 22.7% in per capita spending on children in nonexpansion states and of 27.0% in average healthcare spending per capita for the US population as a whole. …

… The expansion of Medicaid per the terms of the ACA to cover nonaged nondisabled adults with incomes above the FPL has been associated with a shift of Medicaid program financial resources in expansion states away from children and toward other beneficiary groups.