Does Medicaid Expansion Reduce the Extent of County Health Spending in New York?

• In Event: State and Local Evidence for Policy Change and Vulnerable Populations

Abstract

Medicaid expansion has been shown to reduce levels of uninsured rates and increase health service utilization among low-income people. Another important aspect of the program is that the federal government mostly pays expenditures for the newly enrolled Medicaid beneficiaries. Local governments have been deeply involved in providing and financing public health services and programs related to uninsured populations. We investigate how expanded Medicaid coverage shapes overall levels of New York county health spending and the extent of specified health spending areas including health services, public health facilities and public health administration.
This research considers the extent of county spending on health for empirically significant relationship between the governments’ contribution to public health and their residents’ health. Recent research affirms the relationship between public health spending and health outcomes (e.g., Singh 2014; Leider, Alfonso, Resnick, Brady, McCullough, and Bishai 2018). However, scholarly scrutiny has not yet been paid to what factors are associated with varied levels of local health spending.
Medicaid expansion can reduce county health expenditures by enrolling more previously uninsured population in the program and providing more generous federal funds to cover the expanded Medicaid enrollees. For uninsured population in their boundaries, local governments have been major health service providers through public hospitals and clinics and important financiers of public insurance and health programs. Medicaid expansion has contributed to mitigating size of uninsured people (KFF 2018), which has been burdening county governments. In addition, generous federal contribution to the newly enrolled Medicaid beneficiaries under the ACA can partly pass county expenditures for previously uninsured people to the federal government, possibly reducing levels of county health spending.
In the investigation of the relationship between Medicaid expansion and county health spending, we construct health spending models including Medicaid expansion, county political factors and county socio-economic factors as representing health care demands, using panel data between 2008 and 2016. The estimation strategy is fixed-effects with robust standard errors to reduce a possible issue of heteroscedasticity for some control variables regarding socio-demographic information. Furthermore, Arellano-Bond estimation is adopted to resolve possible autocorrelation and endogeneity problems.
Initial findings show that Medicaid expansion negatively impacted the extent of county health spending, while demands for health services did not. This means that counties considered Medicare expansion as a decision factor to influence levels of health spending, but this is not the case for health service demands such as the size of uninsured, the percent of poverty family, drug poisoning death rate, and the size of elder population. Moreover, Medicaid expansion influenced county expenditures for health services and programs, but not for public health service supervision and administration. The findings indicate that counties sustained levels of public officials devoted to public health while reducing its spending on health services and programs.
This study delves into central issues related to county health policy and administration. First, this research introduced how local governments can contribute to ensuring residents’ health. County governments are frontline entities in providing public health services, even though they have been regarded as “forgotten governments.” Moreover, this research offers empirical evidence that state decisions for the ACA Medicaid expansion can influence the extent of county health spending. Unexpectedly, county officials did not consider health service demands as one of the decision factors, which could be negatively related to health outcomes. In addition, this study shows that Medicaid expansion varyingly influences specifics of county health spending. Future research may want to investigate how county variation in health spending is associated with health outcomes.

Authors

• Shihyun Noh, SUNY Brockport

• Ji Hyung Park