Getting Crowded: Individual Market Effects of Medicaid Expansion Refusal

The Patient Protection and Affordable Care Act (PPACA) is one of the most debated, and dividing, pieces of legislation in recent memory. One of the main elements of the PPACA is the mandatory expansion of Medicaid eligibility to 138% of the poverty line and the inclusion of childless adults. Immediately following the law's passage, a number of states sued for the law to be ruled unconstitutional. While the majority of the law held up to judicial scrutiny, the Supreme Court did rule that the mandatory expansion violated states' rights and thus states could opt out. Nearly all of the debate has focused on the direct effects of the newly covered, but there are also important secondary effects to consider. If the newly-eligible portion differs from the general populace then an expansion of Medicaid can affect the private market for health insurance. In this paper, we use policy-level data from the Health Insurance Exchanges and a difference in differences strategy to identify and estimate the effects of Medicaid expansion on the private health insurance market. We find that expanding Medicaid reduces average monthly premiums by $32.40; a decrease of 11.86%.