Association Between Public Health Insurance Expansion and Financial Health Indicators Directly Evaluated by the Eligible in the United States

Abstract

Existing literature suggests that public health insurance expansion improves multiple indicators of financial health and well-being (e.g., credit score, bankruptcy, debt sent to third-party collection agencies, and payday borrowing) of the newly eligible individuals in the United States. However, there is a lack of understanding of the association between these expansions and how the newly eligible directly evaluate their financial health in the post-expansion years. To address the gap, I use data from the National Financial Capability Study (NFCS) 2009, 2012, 2015, 2018, and 2021 waves and employ difference-in-differences and event study designs utilizing temporal and spatial variations in the expansion of Medicaid – a major public health insurance program in the country – under the 2010 Patient Protection and Affordable Care Act. As outcome variables, I use three indicators of financial health directly evaluated by the respondents in multiple waves of the NFCS: perceived difficulty with expenses, debt perception, and financial satisfaction. The findings suggest a link between 2014 Medicaid expansions and a reduction in the perceived difficulty with expenses and indebtedness in 2021 – the second year of the COVID-19 pandemic. However, findings also suggest that these expansions were not associated with financial satisfaction among the newly eligible in the post-expansion years. Overall, these findings indicate that although public health insurance expansion improves some aspects of financial health, it does not appear to change how the newly eligible make an overall evaluation of their finances.

Keywords: Medicaid expansion, Health insurance, Financial health, Financial satisfaction, National Financial Capability Study