Effects of the Medicaid coverage cliff on low‐income elderly Medicare beneficiaries

The Medicaid coverage “cliff” occurs when Medicare beneficiaries with household income exceeding 100% of the federal poverty level lose eligibility for supplemental Medicaid coverage. Using a regression discontinuity design with data from Medical Expenditure Panel Survey and National Health and Nutrition Examination Survey for 2007–2019, we demonstrate that the cliff increases out‐of‐pocket spending by 25% and the probability of experiencing problems paying medical bills by 44.4% without decreases in overall health care spending. However, there is evidence that near‐poor Medicare beneficiaries changed behavior in response to the cliff, increasing the use of high‐value diagnostic and preventive testing by 8.8% and enrollment in a more affordable plan by 12.2%. The cliff does not encourage healthy behavior.