Economics Working Papers

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Working Paper

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Medicaid reimburses healthcare providers for services at a lower rate than any other type of insurance coverage. To account for the burden of treating Medicaid patients, providers claim that they must cost-shift by raising the rates of individuals covered by private insurance. Previous investigations of cost-shifting has produced mixed results. In this paper, I exploit a disabled Medicaid expansion where crowd-out was complete to investigate cost-shifting. I find that hospitals reduce the charge rates of the privately insured. Given that Medicaid is expanding in several states under the Affordable Care Act, these results may alleviate cost-shifting concerns of the reform.

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