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

Keywords: Mental health services; Medicaid; out-of-pocket spending; instrumental variables.

Objective: 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.

Data Sources: Secondary data from the 1998–2011 Medical Expenditure Panel Survey Household Component merged with National Health Interview Survey and state Medicaid eligibility rules data.

Study Design: 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.

Data Extraction Methods: Person-year files were constructed including adults ages 21–64 under 300 percent of the Federal Poverty Level.

Principal Findings: 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.

Conclusions: Previous Medicaid eligibility expansions did not substantially increase mental health service utilization, but they did reduce out-of-pocket mental health care spending.

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