The Effects of Medicaid Eligibility on Mental Health Services and Out‐of‐Pocket Spending for Mental Health Services

Abstract

Millions of low-income Americans will gain health insurance through Medicaid under the Affordable Care Act. This study assesses the impact of previous Medicaid expansions on mental health services utilization and out-of-pocket spending. Secondary data from the 1998-2011 Medical Expenditure Panel Survey Household Component merged with National Health Interview Survey and state Medicaid eligibility rules data. Instrumental variables regression models were used to estimate the impact of expanded Medicaid eligibility on health insurance coverage, mental health services utilization, and out-of-pocket spending for mental health services. Person-year files were constructed including adults ages 21-64 under 300 percent of the Federal Poverty Level. Medicaid expansions significantly increased health insurance coverage and reduced out-of-pocket spending on mental health services for low-income adults. Effects of expanded Medicaid eligibility on out-of-pocket spending were strongest for adults with psychological distress. Expanding Medicaid eligibility did not significantly increase the use of mental health services. Previous Medicaid eligibility expansions did not substantially increase mental health service utilization, but they did reduce out-of-pocket mental health care spending.