  Under the ACA, the federal government paid a substantially larger share of
medical costs of newly eligible Medicaid enrollees than previously eligible
ones. States could save up to 100% of their per-enrollee costs by reclassifying
original enrollees into the newly eligible group. We examine whether this
fiscal incentive changed states' enrollment practices. We find that Medicaid
expansion caused large declines in the number of beneficiaries enrolled in the
original Medicaid population, suggesting widespread reclassifications. In 2019
alone, this phenomenon affected 4.4 million Medicaid enrollees at a federal
cost of $8.3 billion. Our results imply that reclassifications inflated the
federal cost of Medicaid expansion by 18.2%.
