The Effects of State Medicaid Expansions for Working-Age Adults on Senior Medicare Beneficiaries

Do Medicaid expansions to working-age adults affect healthcare spending and utilization among older Medicare beneficiaries? Although economic theory provides conflicting predictions about the presence and direction of such spillover effects, it does identify circumstances when spillovers can reduce Medicare spending. Using data on Medicaid expansions during the 2000s and microdata from the Medicare Current Beneficiary Survey, we find that a 1 percentage point rise in the share of working-age adults eligible for Medicaid has modest effects on the average Medicare beneficiary's spending, but reduces average spending by $477 among dual eligibles. Importantly, we find no evidence of adverse health effects.