Increased Service Use Following Medicaid Expansion Is Mostly Temporary: Evidence from California’s Low Income Health Program

One major concern about the Medicaid expansion is that a high level of need among the newly eligible may lead to runaway costs, which could overwhelm state budgets when federal subsidies no longer cover 100 percent of the expansion population's costs in 2017. Although cost increases as a result of the newly eligible are likely, an important question is whether these increases will be temporary or permanent. Evidence from California's Low Income Health Program suggests that cost and utilization increases among newly eligible Medicaid beneficiaries will be mostly temporary. The findings presented in this policy brief further suggest that early and significant investments in infrastructure and in improving the process of care delivery can effectively address the pent-up demand for health care services of previously uninsured populations.