The Responsiveness of Medicaid Spending to the Federal Subsidy

M. Kate Bundorf and Daniel P. Kessler

No 29492, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: Although economic theory suggests that the federal government can influence spending by states through subsidies to programs that states operate, no recent work has quantified the magnitude of this effect for Medicaid, the largest program of this type in the U.S. We find that Medicaid spending per enrollee responds to the magnitude of the federal subsidy. The Affordable Care Act (ACA) and its subsequent interpretation by the Supreme Court gave states the option to expand eligibility for their Medicaid programs in exchange for increases in the generosity of the federal subsidy. States that exercised this option increased Medicaid spending per enrollee on enrollees who were eligible even before the ACA by approximately 15 percent. Depending on the specification, this translates into an elasticity of Medicaid spending per enrollee with respect to the after-subsidy price of Medicaid to a state of -0.494 to -0.579.

JEL-codes: H11 H71 H72 H75 H77 (search for similar items in EconPapers)
Date: 2021-11
New Economics Papers: this item is included in nep-hea, nep-ias and nep-pbe
Note: EH PE POL
References: Add references at CitEc
Citations:

Published as M. Kate Bundorf & Daniel P. Kessler, 2022. "The Responsiveness of Medicaid Spending to the Federal Subsidy," National Tax Journal, vol 75(4), pages 661-680.

Downloads: (external link)
http://www.nber.org/papers/w29492.pdf (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:nbr:nberwo:29492

Ordering information: This working paper can be ordered from
http://www.nber.org/papers/w29492

Access Statistics for this paper

More papers in NBER Working Papers from National Bureau of Economic Research, Inc National Bureau of Economic Research, 1050 Massachusetts Avenue Cambridge, MA 02138, U.S.A.. Contact information at EDIRC.
Bibliographic data for series maintained by ().