The Effect of Medicaid on Adult Hospitalizations : Evidence from Tennessee's Medicaid Contraction

The 2010 Affordable Care Act (ACA) Medicaid expansions aimed to improve access to care and health status among low-income non-elderly adults. Previous work has established a link between Medicaid coverage expansion and reduced mortality (Sommers, Baicker and Epstein, 2012), but the mechanism of this reduction is not clearly understood. Prior to the ACA, one of the largest policy changes in non-elderly adult Medicaid access was a 2005 contraction through which nearly 170,000 enrollees lost Medicaid coverage in Tennessee. We exploit this change in Medicaid coverage to estimate its causal impact on inpatient hospitalizations. We find evidence that the contraction decreased the share of hospitalizations covered by Medicaid by 21 percent and increased the share uninsured by nearly 61 percent, relative to the pre-reform levels and to other states. We also find that 75 percent of the increase in uninsured hospitalizations originated from emergency department visits, a pattern consistent with losing access to medical homes. However, uninsured hospitalizations increased for both avoidable and unavoidable conditions at the same rate, which does not suggest a lack of preventive care. Although there may be limited symmetry in response to Medicaid expansion and contraction, these findings are also consistent with the substantial decrease in uncompensated care costs in the states that have thus far expanded Medicaid under the ACA. These results also help shed light on the mechanisms by which Medicaid might affect mortality for non-elderly adults