Research Report: June 25, 2019
By: Junjie Guo and Noah Williams
We provide new evidence on the potential impact of Medicaid expansion on health care providers and the privately insured in Wisconsin. First, we directly estimate the impact on the privately insured. We show that increased Medicaid enrollment is associated with higher premiums on employer-provided insurance plans, particularly for single enrollees. Second, we separately estimate the costs and benefits of expansion on health care providers. We show that costs, as some of the newly eligible switch from private insurance to Medicaid, exceed savings due to lower uncompensated care by uninsured patients. This approach is similar to Pauley and Wiswall (2019), but we find larger net costs. We also show that recent reports that Medicaid expansion states had lower premiums on ACA exchanges are largely irrelevant for consumers. The vast majority of exchange purchasers receive subsidies which eliminate nearly all variation in effective premiums across states. Overall, the impact of Medicaid expansion depends on the size and composition of the new enrollment. Under the projections of the Wisconsin state government, we estimate that the cost of Medicaid expansion to health care providers and the privately insured would be $44-$133 million per year. With larger enrollment, from increased Medicaid enrollment by those previously eligible, costs would increase to $93-$184 million per year.