Do People Move to Gain Medicaid Benefits?

The welfare migration hypothesis proposes the idea that people will move to a location because of the availability of social welfare programs. Frequently studied in international development, it is equally applicable to internal migration in the United States due to the wide variation in social welfare programs across states. This variation among states, under the right circumstances, presents itself as a natural experiment—where the differences creating treatment and control groups happen naturally and independent of outside facilitation—allowing researchers to examine the effects of a policy change.

In 2010, Medicaid underwent an expansion originally intended to apply to all states. However, the 2012 Supreme Court ruling of National Federation of Independent Business (NFIB) v. Sebelius allowed states to choose whether or not to expand coverage. This state-level differentiation of Medicaid coverage provided an opportunity for researchers to compare the separate effects on expansion and non-expansion states. Lucas Goodman, an economist at the University of Maryland, used this ruling as a natural experiment to test the welfare migration hypothesis.

The 2010 Medicaid expansion added a new category of eligibility—the “new adult” population—that included non-elderly and non-disabled adults earning up to 138 percent of the Federal Poverty Level (FPL). Roughly 14.6 million individuals were enrolled under this category as of December 2016. Using data from the American Community Survey (ACS), Goodman compared migration rates between states, and included control variables such as demographic indicators, individual unemployment status, and statewide unemployment rates. Analyzing ACS data, Goodman found no significant difference in individual migration patterns between Medicaid expansion and non-expansion states. The desire to enroll in the “new adult” population was not found to be a significant motivator.

Given the burden of moving cross-country, migration would be most expected from non-expansion states to neighboring expansion states. Goodman examined this possibility by focusing on individuals living within reasonable proximity to an expansion state. While some “economically meaningful” distinctions were found, the statistical precision was not strong enough to draw any firm conclusions. In other words, it was impossible to distinguish whether interstate migration was caused from additional Medicaid benefits or other relevant factors.

Prior to the expansion, Medicaid eligibility rates varied widely from states setting different income thresholds. An individual whose income was far above a state’s eligibility threshold might benefit more by moving to an expansion state compared to someone whose income was closer to the cutoff. To capture this nuance, Goodman examined eligibility as a continuous variable instead of a binary one. Goodman found a small increase in people moving to an expansion state, but the results again were not statistically significant.

Given that Medicaid expenditures per person were estimated to be $5,500 in 2014, moving could provide substantial financial benefits for individuals requiring high levels of care. Finding no statistically significant evidence of Medicaid eligibility affecting interstate migration spurs a number of questions. Goodman provides several potential explanations for this discrepancy. First, individuals may decide the costs of moving exceed the benefits of Medicaid coverage. Second, they may anticipate that their state will eventually adopt Medicaid expansion. Finally, they may have already moved a distance too small for the study to detect.

Goodman also notes the possibility of delay in measuring individuals moving to another state, meaning the migration would not be captured in data from 2014. Using additional data sources—such as taxes filed for 2014 or data from the Internal Revenue Service (IRS)—could provide further insight and illuminate a more precise relationship between Medicaid coverage and interstate migration. In fact, there may be evidence in support of the migration hypothesis that is simply not yet measurable. With limited availability of data impeding effective policy making, further analysis is needed to understand the complete list of factors affecting individual responses to Medicaid policy changes.

Article source: Goodman, Lucas. “The Effect of the Affordable Care Act Medicaid Expansion on Migration.” Journal of Policy Analysis and Management 36, no. 1 (2017): 211–38.

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