A study led by Aditi Sen in Health Economics shows that expanding Medicaid can lower premiums in private health insurance markets. Comparing premiums in neighboring counties that straddle expansion and non-expansion states, results show that premiums are 11% lower in states that expanded Medicaid.
Health Econ. 2018 Jul 30. doi: 10.1002/hec.3809. [Epub ahead of print]
How does expansion of public health insurance affect risk pools and premiums in the market for private health insurance? Evidence from Medicaid and the Affordable Care Act Marketplaces.
Sen AP, DeLeire T.
Private insurance market risk pools are likely to be directly affected by expansions of public insurance, in turn affecting premiums. We investigate the effects of Medicaid expansion on private health insurance markets using data on the plans offered through the health insurance "Marketplaces" (also known as Exchanges) established by the Affordable Care Act. We employ geographic matching to compare premiums for private plans in neighboring counties that straddle expansion and nonexpansion states and find that premiums of Marketplace plans are 11% lower in Medicaid expansion states, controlling for demographic and health characteristics as well as measures of health care access. These results are consistent with evidence on the composition of the private insurance risk pool in expansion versus nonexpansion states and associated differences in expected health spending.