Crowd-In: The Effect of Private Health Insurance Markets on the Demand for Medicaid

Perreira, Krista M. (2006). Crowd-In: The Effect of Private Health Insurance Markets on the Demand for Medicaid. Health Services Research, 41(5), 1762-81. PMCID: PMC1955304

Perreira, Krista M. (2006). Crowd-In: The Effect of Private Health Insurance Markets on the Demand for Medicaid. Health Services Research, 41(5), 1762-81. PMCID: PMC1955304

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Objective: To investigate the effects of local labor market conditions and the availability of employer-sponsored health insurance on exits from the Medicaid program. Data Source.

Data for this project come from a unique administrative database containing a 2 percent sample of all cases on California's Medicaid program in 1987 and a 2 percent sample of all new cases starting each year between 1987 and 1995. Study Design.

The results are estimated using a discrete duration model where the monthly exit probability is a function of demographic characteristics, local labor market variables, the probability of having employer-sponsored insurance, and fixed year and county effects. Principal Findings.

Improvements in labor market opportunities (i.e., employment growth, wage growth, and increases in the availability of employer-sponsored health insurance) promote exits off the Medicaid program. A 2.5 percentage point increase in the availability of employer-sponsored insurance leads to a 6 percent increase in the probability that a completed spell lasts no more than 2 years. It would take a 2 percentage point decrease in unemployment rates or a 10 percent increase in average quarterly earnings to yield an equivalent increase in the likelihood of exiting Medicaid within 2 years. These effects are robust to the inclusion of county-level fixed effects and time effects. Conclusions.

Medicaid expenditures and caseloads are sensitive to local economic fluctuations and secular trends in the availability of health insurance. Continued decreases in employer-based health insurance coverage will greatly increase the demand for public insurance coverage and the financial pressures on state governments.




JOUR



Perreira, Krista M.



2006


Health Services Research

41

5

1762-81








PMC1955304


2909

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