Effects of Public Health Insurance Expansions on the Non-Healthcare Consumption Expenditures of Low-Income Households

Abstract

I explore patterns of non-healthcare consumption in targeted U.S. households due to public health insurance expansions. Specifically, I investigate the effects of the recent Medicaid expansions on eligible low-income households’ recurring food and other preventative non-healthcare consumption expenditures. I use a consumer panel data that deploys at-home scanner technology to track grocery purchases. Using an event-study design, and a triple difference-in-differences framework, I find that the Medicaid eligible households from expansion states spent less on fresh produce per adult and more on health and beauty products after the Medicaid expansion. Almost all the increase in the health and beauty product expenditure is due to an increase in expenditure on over-the-counter medications and remedies, which are more responsive and palliative than preventative in nature. The robust reduction in fresh produce expenditures and increase in expenditures on over-the-counter medications and remedies suggests that while expanded public health insurance increases formal healthcare activity and it decreases informal preventative non-healthcare expenditures. These new patterns of non-healthcare consumption may occur because of improved finances due to subsidized healthcare, changes in relative costs of healthcare and non-healthcare consumption, or the substitution between healthcare and preventative non-healthcare consumption. These findings may begin to shift the focus in the literature on the unintended consequences of Medicaid expansion from sins of commission, i.e., moral hazard responses such as increased smoking, alcohol use and junk food consumption, to sins of omission, i.e., responses in which preventative health habits erode.