Medicaid and health resilience: Evidence from TennCare disenrollment

Does public health insurance mitigate the functional consequences of adverse health shocks? I investigate this question by exploiting variation induced by Tennessee's 2005 Medicaid disenrollment, which abruptly terminated coverage for approximately 170,000 childless adults. Using Behavioral Risk Factor Surveillance System (BRFSS) data from 1997 to 2010 and a difference-in-differences design, I estimate Intent-to-Treat effects. I first document that the reform significantly increased the uninsured rate and increased the share of Tennessean childless adults reporting "poor" health status. I also find suggestive evidence of an increase in severe obesity prevalence. I then document a puzzle: while reported days of functional incapacitation increased by 27%, the underlying frequency of physical or mental unhealthy days remained statistically unchanged. I reconcile this divergence by documenting suggestive evidence that the "incapacitation ratio" - the probability that an unhealthy day results in incapacitation - increased by 17%. Further evidence suggests that reduced access to care is a plausible mechanism: following the TennCare disenrollment, the share of childless adults unable to see a doctor due to cost increased by 2.5 percentage points (23%), the evolution of which tracks the evolution of incapacitation ratio well. Taken together, the findings suggest that public health insurance may preserve health resilience, likely by mitigating financial barriers to care.