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JPAM Featured Article: "The Effect of the Affordable Care Act Medicaid Expansion on Migration"

September 12, 2016 12:00 PM

"The Effect of the Affordable Care Act Medicaid Expansion on Migration"

As part of our ongoing effort to promote JPAM authors to the APPAM membership and the public policy world at large, we are asking JPAM authors to answer a few questions to promote their research article on the APPAM website.

By: Lucas Goodman

What was the genesis/history of the idea for your research?

Fiscal federalism, which concerns the optimal division of roles between federal, state, and local governments, is a classic topic in economics. On the one hand, assigning greater responsibility at the state or local level can help better align policy with local preferences. On the other hand, when one locality can exert an externality on another locality, decentralization can create inefficiency. Migration--especially migration in response to state-level means-tested benefits--can be a major source of externalities in this context: if a cut in means-tested welfare benefits in one state leads to migration of beneficiaries from that state to another, states might tend to engage in a “race to the bottom” which would not be optimal when viewed nationally.

I saw the Medicaid expansion in the ACA as a highly unique setting to study “welfare migration” (also known as “welfare magnetism”) -- a setting which is special both from a methodological perspective and a more immediate policy perspective. From a methodological perspective, the expansion of Medicaid to roughly half the country but not the other half creates very large variation in access to health care -- much larger variation than is typically studied in this literature. From an immediate policy perspective, migration responses were often cited by non-expanding states as a reason why they should not expand. Even if the state expenditures on newly eligible beneficiaries was small (due to the 90% federal match), policymakers often argued that an influx of Medicaid-eligible individuals would cause expenses on other programs, such as education, to grow in excess of the associated growth of the tax base. I wanted to see whether the feared migration response would be evident in the data.

What is the main conclusion that becomes evident from your research? (Or, what is our main takeaway?)

I find little to no evidence that the 2014 Medicaid expansion caused a migration response in 2014. Migration from non-expansion states to expansion states, among those who I classify as being potentially Medicaid-eligible, did not increase relative to migration in the reverse direction. Using results from my baseline specification, I do a back-of-the-envelope calculation in the paper to show that migration could have exerted only a trivial externality on other states: even under some aggressive assumptions, the enrollment increase in non-expansion states caused by migration was no more than 2 percent. I show that the null result holds even among people living close to the border between an expansion and non-expansion state, as well as for individuals who report health problems.

What are some of the more interesting or surprising findings/conclusions, you discovered during this process?

This null result was definitely surprising to me. Medicaid expenditures in 2014 for the newly-eligible population averaged about $5,500, which is a large amount relative to income for the typical newly-eligible individual. Yet, individuals were apparently not willing to migrate in order to gain access to these benefits. The big question is whether migration effects will increase in the longer term, either as individuals in non-expansion states learn about the presence of the expansion in other states or states’ expansion/non-expansion decisions appear to be more set-in-stone. I will definitely keep my eye on this over the next few years.

Authors' Bio

Lucas_GoodmanLucas Goodman, (@goodmanl) is currently a fourth-year PhD candidate at the University of Maryland in the Department of Economics. His research interests include tax policy and social insurance programs. He earned a B.S. in Economics from MIT, with a minor in Mathematics. Prior to enrollment in the University of Maryland, he was a research assistant for Robert Pozen, formerly the chairman of MFS Investment Management and currently a senior lecturer at the MIT Sloan School of Management.



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