Medicaid Expansion Lowers Financial Burden for Low Income Adults


Study suggests that the ACA improved financial risk protection against medical bills for low-income adults.

In the third and fourth years of the Patient Protection and Affordable Care Act (ACA) implementation, Medicaid expansions resulted in lower out-of-pocket spending and a lower likelihood of catastrophic financial burden for low income adults, according to a study published in The British Journal of Medicine. The findings suggest that the ACA improved financial risk protection against medical bills for low-income adults, the authors noted.

Researchers performed a quasi-experimental difference-in-difference analysis to examine the out-of-pocket spending and financial burden among low-income adults. The researchers included a nationally representative sample of individuals between 19 and 64 years old, with family incomes below 138% of the federal poverty level. The data were gathered from the 2010-2017 Medical Expenditure Panel Survey.

Expansion states were defined as states that implemented ACA Medicaid expansion or an equivalent program on January 1, 2014. Based on this definition, the analysis included 26 states, of which 18 were considered non-expansion states. Catastrophic financial burden was defined as out-of-pocket plus premium spending exceeding 40% of post-subsistence income.

The study included 37,819 adults whose health care spending did not change within the first 2 years of ACA implementation. However, Medicaid expansion was associated with lower out-of-pocket spending, lower out-of-pocket premium spending, and lower probability of experiencing a catastrophic financial burden in years 3 to 4.

According to the results, out-of-pocket spending decreased from approximately 28% from 2010 to 2017, and they found no evidence that premium contributions changed after implementation of the ACA. Although the change in out-of-pocket plus premium spending was not statistically significant in 2014-2015, it was lower in 2016-2017.

This delay could be attributable to a gradual take-up of Medicaid programs in expansion states for beneficiaries, program administrators, and providers. It is also possible that a reduction in out-of-pocket spending during the first 2 years may have been offset by what the authors called a “pent-up demand” among newly insured individuals who were previously foregoing or delaying care due to a lack of insurance.

Similarly, the probability of experiencing a catastrophic financial burden did not change in 2014-2015, but was 4.7% lower in 2016-2017.

“These findings should be reassuring for policy makers as they suggest that the act successfully achieved one of its primary goals—namely, improving national protection from financial risk against medical bills among low income adults,” the authors wrote.

Furthermore, the authors noted that the magnitude of the effect was large and clinically meaningful. They added that since their analysis included adults who were affected by the ACA and those who were not, the size of the effects should be larger than the estimated impact in the study.


Gotanda H, Jha A, Kominski G, Tsugawa Y, et al. Out-of-pocket spending and financial burden among low income adults after Medicaid expansions in the United States: quasi-experimental difference-in-difference study. British Journal of Medicine; February 5, 2020. Accessed February 10, 2020.

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