Do Government Subsidies to Low-income Individuals Affect Interstate Migration? Evidence from the Massachusetts Health Care Reform.

Do Government Subsidies to Low-income Individuals Affect Interstate Migration? Evidence from the Massachusetts Health Care Reform. James Alm & Ali Enami. Regional Science and Urban Economics, September 2017, Pages 119-131, http://www.sciencedirect.com/science/article/pii/S0166046216303799

Highlights
•    Will low-income individuals move to a state with better health subsidies?
•    This paper estimates the migration impact of the 2006 Massachusetts health care reform.
•    We use difference-in-differences and triple-differences models, with tax return data.
•    We find that the reform had no global effect on the overall movement into the state.
•    We also find that the reform had a border effect on cities closest to the state's borders.

Abstract: Following the passage of the Patient Protection and Affordable Care Act (ACA) of 2010, many – but not all – states decided to expand their Medicaid program in line with provisions of the new law. Will low-income individuals respond to the incentives of living in a state with better health subsidies by relocating to the state? This paper addresses this question by examining the population growth rate of low-income individuals in Massachusetts following the Massachusetts Health Care Reform (MHCR) of 2006. Like the ACA, the MHCR expanded the Medicaid program, and also provided subsidized health insurance for low-income individuals. Using difference-in-differences and triple-differences models and Internal Revenue Service tax return data, we show that the reform did not have a global effect on the movement of low-income individuals across all cities in Massachusetts. However, we also show that the reform did have a local (or border) effect on the movement into border cities of the state, an effect that is relatively large for cities very close to the border but disappears quickly once the distance to border goes beyond 15 miles.

JEL classification: H24, I13, J11

Keywords: Massachusetts health care reform, Interstate migration, Medicaid expansion, Subsidized health insurance, Border analysis