Medicaid Versus Marketplace Coverage For Near-Poor Adults: Effects On Out-Of-Pocket Spending And Coverage

In states that expanded Medicaid eligibility under the Affordable Care Act, nonelderly near-poor adults-those with family incomes of 100-138 percent of the federal poverty level-are generally eligible for Medicaid, with no premiums and minimal cost sharing. In states that did not expand eligibility, these adults may qualify for premium tax credits to purchase Marketplace plans that have out-of-pocket premiums and cost-sharing requirements. We used data for 2010-15 to estimate the effects of Medicaid expansion on coverage and out-of-pocket expenses, compared to the effects of Marketplace coverage. For adults with family incomes of 100-138 percent of poverty, living in a Medicaid expansion state was associated with a 4.5-percentage-point reduction in the probability of being uninsured, a $344 decline in average total out-of-pocket spending, a 4.1-percentage-point decline in high out-of-pocket spending burden (that is, spending more than 10 percent of income), and a 7.7-percentage-point decline in the probability of having any out-of-pocket spending relative to living in a nonexpansion state. These findings suggest that policies that substitute Marketplace for Medicaid eligibility could lower coverage rates and increase out-of-pocket expenses for enrollees.