Calculating the Health Benefits of Medicaid Expansion

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In addition to health benefits, patients who opted for Medicaid over private insurance saved more than $500 annually in out-of-pocket costs, researchers found. | iStock/FatCamera

The controversial expansion of the federally funded Medicaid program has led to significant improvements in health for millions of older, low-income adults, according to a new study by researchers from Stanford and three other universities.

Published in July, the study shows that patients between the ages of 50 and 64 who were covered by the expansion suffered 30% fewer strokes and heart problems, were 17% less likely to be diagnosed with diabetes, and 10% less likely to be diagnosed with high blood pressure, when compared with patients who were not covered.

“There is something about publicly funded Medicaid that is working well for low-income, older adults,” says M. Kate Bundorf, a professor (by courtesy) at Stanford Graduate School of Business and coauthor of the study along with Melissa McInerney of Tufts University, Ruth Winecoff and Kosali Simon of Indiana University, and Padmaja Ayyagari of the University of South Florida.

Along with the reduction in major health issues, the researchers found that the expansion also led to improvements in quality of life, with patients having fewer problems walking, dressing, and feeding themselves.

Out-of-Pocket Savings Are Key

Perhaps surprisingly, the health improvements were not a result of patients who had previously been uninsured suddenly gaining coverage. In fact, the more than 3,000 adults covered by the study were largely insured before they moved to Medicaid.

Although the researchers said that it isn’t possible to understand exactly why the expansion led to significant improvements in health, it appears that lower out-of-pocket costs may have been a key factor. They found that patients who moved to Medicaid from other forms of insurance on average saved between $500 and $600 a year in out-of-pocket costs, says Bundorf, a senior fellow at the Stanford Institute for Economic Policy Research and an associate professor of health research and policy at the School of Medicine.

“Even without increases in overall coverage rates, the shift to Medicaid was associated with health improvements among low-income adults, possibly due to Medicaid’s lower cost-sharing,” she says.

The savings may have been large enough to encourage patients to see their doctors more often and take advantage of forms of treatment that they had previously deemed too expensive, the study suggests. For example, 20% more patients said they had seen a doctor more than 10 times in the preceding two years, though the researchers cannot definitively link that to the expansion.

The Affordable Care Act implemented its expansion of Medicaid in 2014, but court rulings allowed states to opt out — and 12 have so far. Thirty-eight others, plus Washington, D.C., have agreed to the expansion.

The data for the study was drawn from the University of Michigan’s Health and Retirement Study, which has followed adults over age 50 for more than 25 years and has been cited thousands of times. Bundorf and her colleagues did not include people over 65 in their analysis since they are eligible to participate in Medicare, a separate program. The researchers used Michigan health study data from 2010 to 2016.

Helping the Most Vulnerable

Studies by other researchers have suggested that adding people to Medicaid has improved the health of the covered population as a whole and led to longer lives. But the study by Bundorf and her colleagues is the first to look specifically at morbidity among a particularly vulnerable segment of the population: adults between the ages of 50 and 64 whose annual income falls below the federal poverty line of $17,760 for a single person. “These are people likely to have a high need for health care,” Bundorf says.

Indeed, 43% of the people participating in the University of Michigan study reported that they are obese, and 62% said they had been treated for high blood pressure.

Metabolic syndrome is a broad category of health problems encompassing a number of serious conditions, including high blood pressure, high blood sugar, excess body fat, and high cholesterol. Bundorf and her colleagues found that the expansion led to improvements in several measures of health, including a 12% reduction in metabolic conditions and a reduction of 32% in complications resulting from those conditions.

The study also found a decrease of 18% in the likelihood of reporting difficulties in gross motor skills, which are measured as walking one block, walking across a room, climbing one flight of stairs, and bathing. Difficulties with common daily tasks such as eating or dressing were 34% less likely. However, the study did not find that the expansion led to a decrease in problems related to mental health.

The researchers note that their findings relate to a specific segment of the population — older, low-income adults — and may not apply to other groups. However, they suggest that future research should examine whether improvements to ACA marketplaces and employer-provided health insurance have led to better outcomes for older, higher-income adults.

The study has important policy implications in that it demonstrates that an expansion of Medicaid may improve the health of older, low-income adults even without an increase in the percentage of people who are covered by health insurance. “And given that the youngest baby boomers are 55, these health improvements will be experienced by a large number of older adults,” the researchers conclude.