The financial impacts of Medicaid expansion
A new study has found that low-income Michigan, US, residents who enrolled in a new state health insurance plan didn’t just get coverage for their health needs – many also got a boost in their financial health. Economist Dr Sarah Miller of the University of Michigan’s Ross School of Business published the paper on the site of the National Bureau of Economic Research with colleagues from the Federal Reserve Bank of Chicago, University of Illinois, Chicago and Northwestern University. The researchers worked with the Michigan Department of Health and Human Services, which runs the Healthy Michigan Plan, to obtain information about more than 322,000 enrolees without the researchers' having access to any individual's identifiable data. They used a double-blind matching procedure to match the data with enrolees’ credit reports and studied them as a group, with a focus on people who enrolled in the program's first year, starting in April 2014, and hadn't had health insurance before they joined. “Across the board, we saw a pretty sizable effect, not just on unpaid medical bills, but also unpaid credit card bills, and on public records for evictions, bankruptcies, wage garnishments and other actions,” said Dr Miller. “Enrolees’ financial wellbeing seems to improve when they can get the medical care they need without having to put it on a credit card. And the largest effects are among the sickest enrolees.”
The study found that that enrolment in the Healthy Michigan Plan: reduced the amount of medical bills in collections that the average enrolee had by 57 per cent, or about US$515; reduced the amount of debt past due but not yet sent to a collection agency by 28 per cent or about $233; led to a 16 per cent drop in public records for financial events such as evictions, bankruptcies and wage garnishments; bankruptcies alone fell by 10 per cent; resulted in enrolees’ being 16 per cent less likely to overdraw their credit cards; led to a rise in individual credit scores, including the number with a ‘deep subprime’ rating falling by 18 per cent, and the number listed as ‘subprime’ falling by three per cent; allowed enrolees to engage in more borrowing to buy cars or other goods and services, which is consistent with better credit scores; and people with chronic illnesses, and those who had a hospitalisation or emergency department visit during the study period, saw bigger reductions in their bills sent to collection, and bigger increases in their credit scores
“This study also suggests that people at risk of losing Medicaid because they don't complete a work requirement or paperwork could be at a great financial risk, even if they do not have a chronic illness or a major medical issue. They're the ones at risk of losing their coverage, and it won't just mean they can't go to the doctor,” Dr Miller said. The researchers are continuing their work to quantify the financial impacts of Medicaid expansion in national data.