Medicaid Expansion and Intensity of Treatment: Increased Cost in the Emergency Department

We estimate the impact of the ACA Medicaid expansion on the intensity of treatment in the emergency department. We conduct a visit level analysis with a difference-in-differences specification for the number of procedures, number of diagnoses, and visit characterization according to the NYU Algorithm using the State Emergency Department Databases (SEDD) for six states in 2013-2014. Our results show that in expanding states the number of procedures increased by up to 0.27 per visits (3.9%), and the number of diagnoses declined by up to 0.10 diagnoses per visit. While we remain agnostic about the mechanism for the increase in procedures, we believe increasing reimbursements motivates providers to perform more procedures, or bill more carefully, or both. We also find evidence of changing composition of visit type, with an increase in non-preventable emergency visits and primary care treatable visits. This increase is particularly strong among patients who were uninsured in 2013. We estimate that the additional procedures cost $248 million, constituting at least 3.1% of the total medical expenditure associated with the expansion in the four expanding states in our study. We conclude that the provider side response in treatment presents a substantial additional cost to expanding insurance coverage with fee-for-service payment structure, and should be accordingly included in projected costs of future insurance expansions.