Spillover effects of Medicaid expansion on Medicare: Evidence from administrative data

Abstract

The 2014 Medicaid expansion excluded Americans who were 65 years old and older, but they could still be affected via spillover effects. Using Medicare administrative data, we test for spillovers in Medicare spending and Medicaid coverage among low‐income Medicare beneficiaries. We analyze two cohorts: those under 65 in 2014, who could have been induced by the expansion to take up Medicaid before joining Medicare; and those 65 or older in 2014, whose Medicaid eligibility was never affected by the expansion. We only find spillovers for the under‐65 cohort, where Medicare spending fell and Medicaid coverage increased, with no measurable adverse effect on mortality. Combined with a null effect for the over‐65 cohort, these facts suggest Medicare beneficiaries were not crowded out of health care by the expansion. Instead, those under‐65 cohort satisfied “pent‐up” demand via Medicaid, consuming care they would have otherwise obtained later under Medicare.