The Impact of Medicaid Expansion on the Healthfulness of Non-Alcoholic Beverage Choices among Low-Income Households

Abstract

This article investigates the impact of Medicaid expansion under the Affordable Care Act (ACA) on beverage choices by low-income households. A theoretical analysis indicates that Medicaid expansion could induce an income effect from relaxation of the budget constraint that could increase unhealthy beverage purchases, and a nutrition education effect that could decrease them. To empirically test these effects, we utilize household-level data of beverage purchases from 2013 to 2016 in 52 U.S. metropolitan areas in Medicaid expansion and non-expansion states. The start of ACA Medicaid expansion enrollment in 2014 by 31 states and household Medicaid eligibility were used as the identification strategy. Results from a triple-differences model with nearly one million observations on purchases of seven beverage categories indicate that Medicaid expansion resulted in eligible households buying more soda and fruit drinks and less bottled water. Results from a mixed-logit model with nearly 17 million purchase observations at the household-brand level indicate that Medicaid expansion led to overall increases in eligible households’ purchases of and valuation of sugary beverages and a decrease in their price elasticities of demand. Overall, the empirical results lend support to income effect hypothesis of Medicaid expansion but not to the nutrition education effect hypothesis. The unintended impacts found in these empirical results highlight the need to complement the benefits of Medicaid expansion with effective diet quality programs or investigate nudges to improve the healthfulness of low-income household beverage choices.