When pondering Medicaid expansion, one hesitation that many states had about offering coverage to all low-income residents was the “welfare magnet” effect. This demographic trend involves people who live in a state that declined the Affordable Care Act’s (ACA) assistance to expand Medicaid moving to a state that did, thus increasing the recipient state’s financial burden.
But a recent study in Health Affairs that analyzed U.S. migration data from 1998 to 2012 in Arizona, Maine, Massachusetts, and New York predicted that this “spillover” migration effect would actually not be a common strategy that people will use to obtain Medicaid coverage. Overall, the authors conclude, interstate migration will not be a significant financial burden for states that end up expanding their programs. The finding weakens a common argument against health care reform that concerned Medicaid expansion.
"Though many states have not opted in to the ACA Medicaid expansion, they may decide to do so in the future. Our study can inform these decisions by showing what happened when states implemented similar public insurance expansions in the past. We found no evidence that these states became so-called 'welfare magnets,' attracting low-income individuals from other states," lead author, Aaron Schwartz of Harvard Medical School, told Medical Press.
The Harvard study will be important to New Hampshire, Pennsylvania, Missouri, and Utah as they weigh whether to expand Medicaid based on the new health law, Reuters reported. "Our findings are relevant for forecasting the cost and coverage consequences of states' decisions about expanding Medicaid eligibility," Schwarts and Harvard School of Public Health colleague, Benjamin Sommers, concluded in their study.
Another study in Science that looked at Medicaid coverage of adults found that emergency room visits in Oregon had increased by 40 percent over 18 months compared to the uninsured. The study is one of the first to have an in-depth look at the effects of the recently uninsured being covered by Medicaid, principle investigator Amy Finklestein explained to MIT’s news office. The result shows a greater use of the emergency department due to cost not being as great an issue, which allows for a better chance at treating and preventing illness. But the flipside is that those who are insured still seek urgent care when their health issue is might warrant a visit to a primary care physician, which is a cheaper alternative.
Meanwhile, the Centers for Medicare and Medicaid (CMS) also reported in Health Affairs that health care spending in the United States increased at a rate of 3.7 percent to $2.8 trillion in 2012. This marks the fourth year in a row that health spending was at its slowest rate of increase ever since the National Health Expenditure Accounts began keeping track 53 years ago.
“For Medicaid, slowing enrollment growth kept spending growth near historic lows,” the authors wrote. “Growth in private health insurance spending also remained near historically low rates in 2012, largely influenced by the nation’s modest economic recovery and its impact on enrollment.”
Schwartz A, Sommers B. Moving For Medicaid? Recent Eligibility Expansions Did Not Induce Migration From Other States. Health Aff. 2014.
Martin AB, Hartman M, Whittle L, Catlin A. National Health Spending In 2012: Rate Of Health Spending Growth Remained Low For The Fourth Consecutive Year. Health Aff. 2014.
Taubman SL, Allen HL, Wright BJ, Baicker K, Finkelstein AN. Medicaid Increases Emergency-Department Use: Evidence from Oregon's Health Insurance Experiment. Science. 2014.