The effect of the affordable care act and racial dynamics on federal Medicaid transfers

Abstract The Affordable Care Act (ACA) was intended to reduce inequalities in access to healthcare resources. However, a 2012 Supreme Court decision allowed states to opt out of a key component of the policy, leading to even greater variation in Medicaid’s implementation. Using this variation, we estimate the effect of the ACA Medicaid expansion and racial dynamics on federal Medicaid-CHIP transfers received by states at the county level. To do so, we use a difference-in-differences specification and allow the expansion effect to vary across counties with different population shares of Black Americans. We find that Medicaid expansion increases the funds that are sent to counties, but additional analyses show that the racial demographics of a county also serve to influence how federal resources are apportioned. Specifically, the analyses reveal a curvilinear relationship between the proportion of Black residents and the dispersal of funds.