Long-Term Changes in Health Care Use and Outcomes Among Groups Maintaining Versus Losing Medicaid Upon Medicare Enrollment

Context: About 280,000 older adults experience the “Medicare Cliff” each year, becoming eligible for Medicare and losing Medicaid coverage when they turn age 65 years due to discontinuities in financial eligibility criteria. Yet, little is known about the long-term associations between a loss in Medicaid coverage and health status, health care utilization, and economic status in later life. Our study builds on previous research by longitudinally examining how health outcomes, health utilization measures, and out-of-pocket medical expenses change when people experience the Medicare Cliff compared with those who maintain their coverage and those who experience temporary disruptions in coverage.

Methods: Using longitudinal data from the Health and Retirement Study over the period 1998-2020, we tracked individuals over a 10-year follow-up period from when they first became eligible for Medicare.

Findings: Our analysis indicated that even though respondents with Medicaid prior to Medicare eligibility started with better health overall, permanent loss of Medicaid was associated with poorer health outcomes and higher mortality relative to those who kept Medicaid or had a temporary disruption. Permanent loss of Medicaid was also negatively associated with appropriate health care utilization and positively associated with higher out-of-pocket health care spending relative to those who kept Medicaid or had a temporary disruption.

Conclusions: Findings show that experiencing the Medicare Cliff is associated with a range of negative outcomes, including increases in overall health care expenditures relative to those who maintain Medicaid eligibility or only lose it temporarily. Addressing the Medicare Cliff issue would therefore lead to improved health outcomes and reduced health care costs. Our analysis provides a strong basis for policymakers to address this coverage discontinuity through specific policies related to Medicaid financial eligibility rules and access to Medicare Savings Plans to financially protect older adults.