Many States Were Able To Expand Medicaid Without Increasing Administrative Spending

With the passage of the Affordable Care Act, states were given the option to expand their Medicaid programs. Since then, thirty-eight states and Washington, D.C., have done so. Previous work has identified the widespread effects of expansion on enrollment and the financial implications for individuals, hospitals, and the federal government, yet administrative expenditures have not been considered. Using data from all fifty states for the period 2007-17, our study estimated the effects of Medicaid expansion overall, as well as differing effects by the size and nature of the expansions. Using a quasi-experimental approach, we found no overall effect of expansion on administrative spending. However, the size of the expansion may have produced differing effects. States with small expansions experienced some increases in administrative spending, whereas states with large expansions experienced some decreases in administrative spending, including a $77 reduction in per enrollee administrative spending compared with nonexpansion states. As more states consider expanding their Medicaid programs, our findings provide evidence of potential effects.