Medicaid and Financial Health

Abstract

This paper investigates the effects of the Medicaid expansion provision of the Affordable Care Act (ACA) on households' financial health. Our findings indicate that, in addition to reducing the incidence of unpaid medical bills, the reform provided substantial indirect financial benefits to households. Using a nationally representative panel of 5 million credit records, we find that the expansion reduced unpaid medical bills sent to collection by $3.4 billion in its first two years, prevented new delinquencies, and improved credit scores. Using data on credit offers and pricing, we document that improvements in households' financial health led to better terms for available credit valued at $520 million per year. We calculate that the financial benefits of Medicaid double when considering these indirect benefits in addition to the direct reduction in out-of-pocket expenditures.

The Impact of the Affordable Care Act: Evidence from California's Hospital Sector

“…A likely mechanism for improved health is reallocation of patients from government to privately-owned -and better-quality -hospitals. This channel has previously received little attention as studies typically valued Medicaid on the basis of improved health or reduced financial risk (Currie and Gruber 1996b;Goodman-Bacon, 2016;Brevoort et al, 2017;Gallagher et al, 2017). Our results also extend previous work that has focused on specific categories of care, such as ER use (Barakat et al, 2017;Garthwaite et al, 2017 andNikpay et al 2017), drug prescriptions (Ghosh et.…”

Did Medicaid Expansion Reduce Medical Divorce?

“…The ACA's Medicaid expansion also improved household's acute financial situation. It reduced health spending (Levy, Buchmueller, and Nikpay 2017) and also improved credit scores and reduced unpaid bills, medical bills, over limit credit card spending, delinquencies, collection balances, and public records inquiries (Brevoort, Grodzicki, and Hackmann 2017;Miller, Hu, Kaestner, Mazumder, and Wong 2018;Hu, Kaestner, Mazumder, Miller, and Wong 2018).…”

Did the ACA's Dependent Coverage Mandate Reduce Financial Distress for Young Adults?

“…The most direct effect is on uninsured individuals who previously were delinquent on or unable to pay their medical bills. Because delinquent and/or unpaid medical bills can lead to substantial financial problems (Brevoort et al, 2017), increasing insurance coverage should directly lead to a lower incidence of these events and, in turn, reduce financial distress. There are also additional mechanisms through which the provision of health insurance can reduce financial distress.…”

“…While the majority of the CARD Act was aimed at regulating different aspects of the credit card industry, one of the provisions of the law restricted lenders' offerings of credit cards to young adults under the age of 21. 13 The timing and demographic target of this portion of the CARD Act provides additional motivation to restrict the sample to older young adults.…”

“…Our approach also addresses the issue raised by Slusky (2017) regarding previous research that used difference-indifferences strategies to study the dependent coverage mandate. He found that previous studies often failed placebo tests because the age bandwidth for treatment groups was too wide and argued that future studies should reduce the age bandwidth to control for the age-structure of health insurance markets 13. In particular, credit card companies were not allowed to solicit students within 1,000 feet of college campuses or events, were barred from sending preapproved card offers to individuals under 21, and were not allowed to issue a credit card for individuals under 21 unless they provided written proof of ability to repay their debt.…”