Medicaid and Financial Health

66 Pages Posted: 6 Nov 2017 Last revised: 31 Jan 2021

See all articles by Kenneth P. Brevoort

Kenneth P. Brevoort

Board of Governors of the Federal Reserve System

Daniel Grodzicki

Penn State Economics

Martin B. Hackmann

University of California, Los Angeles (UCLA); National Bureau of Economic Research (NBER)

Multiple version iconThere are 2 versions of this paper

Date Written: November 2017

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.

Suggested Citation

Brevoort, Kenneth and Grodzicki, Daniel and Hackmann, Martin B., Medicaid and Financial Health (November 2017). NBER Working Paper No. w24002, Available at SSRN: https://ssrn.com/abstract=3065842

Kenneth Brevoort (Contact Author)

Board of Governors of the Federal Reserve System ( email )

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Daniel Grodzicki

Penn State Economics ( email )

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University Park, PA 16802-3306
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Martin B. Hackmann

University of California, Los Angeles (UCLA) ( email )

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Los Angeles, CA 90095
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National Bureau of Economic Research (NBER) ( email )

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