Craig Garthwaite
May 03, 2013
Brown Bag Lunch Series
Northwestern University, Kellogg School of Management
"Public Health Insurance Spillovers" (Joint with Matthew Notowidigdo and Tal Gross)
12:10PM - 1:10PM, Jacobs Center, Leverone 619
Abstract:
This paper studies the economic spillovers of public health insurance. To do so, it examines the end of Tennessee’s Medicaid expansion in 2005, the largest public health insurance disenrollment in the history of the United States. Approximately 170,000 Tennessee residents lost Medicaid coverage. Exploiting both across and within-state variation in the relative magnitude of the disenrollments, we find that the policy change caused an immediate increase in private health insurance coverage and extensive margin labor supply. This implies a strong preference for health insurance among those who lost Medicaid coverage. Additionally, we find that the disenrollment increased Tennessee hospitals’ uncompensated care by roughly 21 percent, with private, not-for-profit hospitals accounting for a majority of this increase. Between 46 and 66 percent of the budgetary savings from the disenrollment amounted to a transfer from private firms to the state government. These results demonstrate large spillovers from public health insurance and are useful in evaluating the likely consequences of reforms such as the Affordable Care Act.