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The impact of Medicaid expansion on employer provision of health insurance (Abraham, Royalty & Drake, 2019)

Absence of conflict of interest.

Citation

Abraham, J. M., Royalty, A. B., & Drake, C. (2019). The impact of Medicaid expansion on employer provision of health insurance. International Journal of Health Economics and Management, 19, 317-340.

Highlights

  • The study's objective was to examine the Affordable Care Act’s (ACA) expansion of Medicaid eligibility’s impact on four employer-sponsored insurance (ESI) outcomes: the probability that an establishment offers health insurance, the percentage of the establishment’s workforce that is eligible for the ESI offered, the percentage of an establishment’s workforce that takes up the ESI offer, and the out-of-pocket premium employees pay for single coverage.

  • The study uses a difference-in-differences design that uses differences in the timing of state Medicaid expansion to create treatment (i.e., states that expanded Medicaid) and comparison (i.e., states that did not expand Medicaid) groups for the study.  The study tracks outcome trends in these groups before and after Medicaid expansion to measure differences in outcomes that may be attributable to Medicaid expansion. The primary data source for the study was the Medical Expenditure Panel Survey-Insurance Component (MEPS-IC) List Sample for 2010-2015. The study also used data from the U.S. Department of Labor's Bureau of Labor Statistics' Local Area Unemployment Statistics file,  the Kaiser Commission on Medicaid and the Uninsured, and the Kaiser Family Foundation. The authors used a statistical model to compare outcomes in states that expanded Medicaid to states that did not.

  • The study found no statistically significant impact of ACA Medicaid expansion on three of the four employment outcomes it examined, indicating that Medicaid expansion did not have a widespread effect on outcomes related to employer-sponsored insurance. The study found a statistically significant negative relationship between Medicaid expansion and the percentage of workers at an establishment who were eligible for employer-sponsored insurance.  That is, the study found that Medicaid expansion reduced the percentage of workers who were eligible for employer-sponsored insurance at an establishment. 

  • This study receives a moderate evidence rating. This means we are somewhat confident that the estimated effects are attributable to the intervention, but other factors might also have contributed.

Intervention Examined

Affordable Care Act (ACA)

Medicaid expansion

Features of the Intervention

With the passage of the Affordable Care Act (ACA), some states expanded Medicaid eligibility. Tax and price advantages have incentivized employers to provide medical insurance to employees since the mid-twentieth century. Medicaid expansion changed this landscape by expanding workers' options for accessing non-employer-based medical insurance.

Under the ACA, states had the opportunity to elect to expand public insurance through Medicaid. By 2015, a total of 28 states and the District of Columbia had elected to expand eligibility for Medicaid. The ACA included provisions to reduce the risk of crowd out, that is, individuals changing from private to public insurance coverage. States that expanded Medicaid extended coverage to individuals with incomes below 138% of the Federal Poverty Level (FPL).

Features of the Study

The study uses a quasi-experimental difference-in-differences design that examines trends before and after Medicaid expansion to measure differences in establishment-level outcomes in states that expanded Medicaid (i.e., the treatment group) and in states that did not expand Medicaid (i.e., the comparison group). The study used a statistical model to measure the impacts Medicaid expansion on outcomes related to employer sponsored insurance (ESI). The primary data source for the study was the Medical Expenditure Panel Survey-Insurance Component (MEPS-IC) List Sample for 2010-2015. The MEPS-IC is a nationally representative survey of employers in the United States. The study also used data from the U.S. Department of Labor's Bureau of Labor Statistics' Local Area Unemployment Statistics file,  the Kaiser Commission on Medicaid and the Uninsured, and the Kaiser Family Foundation, which served as sources of data on labor market conditions. 

The study included data from 141,900 private sector establishments across 50 states and the District of Columbia. The study did not use clusters. Among these establishments, 34% had been in business fewer than 10 years and 8% were non-profit firms. The workers employed by the establishments in the sample were 45% female, 33% were ages 50 and older, 33% earned under $11.50 per hour, and 5% worked at an establishment that had any union presence.

Study Sites

Participating study sites were private sector establishments in the 50 states in the United States as well as the District of Columbia.

Findings

Employer Benefits Receipt

  • The study found no statistically significant relationship between Medicaid expansion and the probability of establishments offering insurance to its employees.
  • The study found a statistically significant negative relationship between Medicaid expansion and percentage of workers eligible for employer-sponsored insurance. 
  • The study found no statistically significant relationship between Medicaid expansion and number of eligible employers taking up the insurance offer.
  • The study found no statistically significant relationship between Medicaid expansion and out of pocket premium employees pay for single coverage.

Considerations for Interpreting the Findings

This study used a quasi-experimental design to compare establishment-level outcomes in states that expanded Medicaid to those in states that did not expand Medicaid. Because the study did not create its treatment and control groups using random assignment, we cannot be certain that differences in the employer benefits outcomes between the treatment and comparison group are solely due to Medicaid expansion (i.e., study findings are not causal). Additionally, this study measured outcomes over a relatively short period of time and findings may not be generalizable over a longer time period. 

Causal Evidence Rating

This study receives a moderate evidence rating. This means we are somewhat confident that the estimated effects are attributable to the intervention, and not to other factors.

Reviewed by CLEAR

March 2022