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The Effects of the Massachusetts Health Reform on Household Financial Distress

51 Pages Posted: 5 Feb 2014 Last revised: 4 Sep 2015

Bhashkar Mazumder

Federal Reserve Bank of Chicago

Sarah Miller

University of Notre Dame

Date Written: July 17, 2015

Abstract

A major benefit of health insurance coverage is that it protects the insured from unexpected medical costs that may devastate their personal finances. In this paper, we use detailed credit report information on a large panel of individuals to examine the effect of a major health care reform in Massachusetts in 2006 on a broad set of financial outcomes. We exploit plausibly exogenous variation in the impact of the reform across counties and age groups using levels of pre-reform insurance coverage as a measure of the potential effect of the reform. We find that the reform reduced the total amount of debt that was past due, the fraction of all debt that was past due, improved credit scores and reduced personal bankruptcies. We also find suggestive evidence that the reform decreased third party collections. The effects are most pronounced for individuals who had limited access to credit markets before the reform. These results show that health care reform has implications that extend well beyond the health and health care utilization of those who gain insurance coverage.

Keywords: health insurance, debt, ACA, Massachusetts, health care reform

JEL Classification: I13, I11, H750

Suggested Citation

Mazumder, Bhashkar and Miller, Sarah, The Effects of the Massachusetts Health Reform on Household Financial Distress (July 17, 2015). FRB of Chicago Working Paper No. 2014-01. Available at SSRN: https://ssrn.com/abstract=2390186 or http://dx.doi.org/10.2139/ssrn.2390186

Bhashkar Mazumder (Contact Author)

Federal Reserve Bank of Chicago ( email )

230 South LaSalle Street
Chicago, IL 60604
United States

Sarah Miller

University of Notre Dame ( email )

361 Mendoza College of Business
Notre Dame, IN New South Wales 46556-5646
United States

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