The Effect of Health Insurance on Home Payment Delinquency: Evidence from ACA Marketplace Subsidies

78 Pages Posted: 23 Feb 2017 Last revised: 22 Jul 2017

Emily Gallagher

Washington University in St. Louis - John M. Olin Business School

Radhakrishnan Gopalan

Washington University in St. Louis - John M. Olin Business School

Michal Grinstein-Weiss

University of North Carolina (UNC) at Chapel Hill; Washington University in St. Louis

Date Written: March 18, 2017

Abstract

We use administrative income tax data coupled with survey responses from roughly five thousand households living near the federal poverty line (FPL) to estimate the effect of health insurance coverage on rent and mortgage delinquency. Our identification strategy centers on states that did not expand Medicaid as part of the Affordable Care Act (ACA). We employ a fuzzy regression discontinuity (RD) design, exploiting the income eligibility threshold to receive Marketplace subsidies (100% FPL) as a source of exogenous variation in insurance coverage. Marketplace subsidies result in an 11 percentage point increase in coverage among intent-to-treat households. Households with subsidized coverage are 41 percentage points less likely to be delinquent on home payments as compared to similar uninsured households. Consistent with health insurance protecting household liquidity against health shocks, medical spending is a smaller share of liquid assets for insured households that experience a health shock. Calculations based on these findings suggest that a substantial portion of the cost of the subsidy program is potentially offset by the societal savings associated with fewer evictions/foreclosures among recipients of subsidized insurance.

Keywords: Regression discontinuity, Affordable Care Act, Obamacare, exchanges, bankruptcy, LMI households, Medicaid, coverage gap

Suggested Citation

Gallagher, Emily and Gopalan, Radhakrishnan and Grinstein-Weiss, Michal, The Effect of Health Insurance on Home Payment Delinquency: Evidence from ACA Marketplace Subsidies (March 18, 2017). Available at SSRN: https://ssrn.com/abstract=2922260 or http://dx.doi.org/10.2139/ssrn.2922260

Emily Gallagher (Contact Author)

Washington University in St. Louis - John M. Olin Business School ( email )

One Brookings Drive
Campus Box 1133
St. Louis, MO 63130-4899
United States

Radhakrishnan Gopalan

Washington University in St. Louis - John M. Olin Business School ( email )

One Brookings Drive
Campus Box 1133
St. Louis, MO 63130-4899
United States

Michal Grinstein-Weiss

University of North Carolina (UNC) at Chapel Hill ( email )

102 Ridge Road
Chapel Hill, NC NC 27514
United States

Washington University in St. Louis ( email )

One Brookings Drive
Saint Louis, MO 63130-4899
United States

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