Does Medicaid expansion effect healthcare premiums? An analysis of the effects of expansion under the Affordable Care Act

Abstract

This paper looks at how the Affordable Care Act affected private health insurance premiums, with a focus on the expansion of Medicaid. Previous research on healthcare premiums are divided, with some suggesting that more provider options leads to lower premiums, while others suggest that more options does little to affect premium prices. I hypothesize that the expansion of Medicaid would lead to a decrease in private insurance premium growth rates and test this hypothesis with state level data on private insurance premium growth rates between 2014 and 2019 as my dependent variable and implementation of Medicaid expansion as my independent variable. I use a linear regression and also control for population growth rate, obesity growth rate, nurse pay growth rate, income growth rate, and drug cost growth rate. The linear regression revealed that the implementation of Medicaid expansion led to a 30.676% decrease in premium growth rates, confirming my hypothesis and suggesting that Medicaid expansion under the Affordable Care Act did help control insurance premium growth rates.