Losing Insurance and Behavioral Health Hospitalizations: Evidence from a Large-scale Medicaid Disenrollment

We study the effects of losing insurance on behavioral health – mental health and substance use disorder (SUD) – community hospitalizations. We leverage variation in public insurance coverage eligibility offered by a large-scale and unexpected Medicaid disenrollment in Tennessee. Losing insurance decreased SUD-related hospitalizations but mental illness hospitalizations were unchanged. Use of Medicaid to pay for behavioral health, mental illness and SUD, hospitalizations declined post-disenrollment. Mental illness hospitalization financing shifted to private insurance, Medicare, and patients, while SUD treatment financing shifted entirely to patients. We also investigate the implications of reliance on data that is not representative at the level of the treatment variable and propose a possible solution.