Since the Affordable Care Act and Medicaid expansion took effect, researchers have been tracking the effects of expanded coverage on Americans’ financial well-being. Recent findings suggest that gaining Medicaid coverage is associated with declining medical debt, fewer personal bankruptcies, improved credit scores, and reduced reliance on predatory lending practices.
Here are three recent studies that discuss the evidence in detail.
“Using a nationally representative panel of five 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.” The study also found “approximately 50,000 fewer bankruptcies over the first two post-reform years.”
After certain California counties moved quickly to expand Medicaid, the number of payday loans in those counties each month declined 11% compared to counties, both in California and across the country, that had not expanded Medicaid eligibility during the study period. The number of unique borrowers and the amount of payday loan debt also declined in early expansion counties, particularly among Californians under 65, the group eligible for coverage. The authors note that the decline in payday borrowing “did not appear to be due to a preexisting trend” and “was more pronounced in areas that had a higher share of uninsured people before the expansion.” Read the full Health Affairs article, “Early Medicaid Expansion Associated with Reduced Payday Borrowing in California.“
Payday loans are a form of short-term, high-interest borrowing primarily used by low- and middle-income Americans. Payday loans are considered a major financial hazard because they trap borrowers in a cycle of debt. “In 2012, about 12 million Americans took out at least one payday loan; the average borrower took out eight loans of $375 each, and for each spent $520 in interest.”
There is evidence that the Medicaid expansion helped families make ends meet by freeing up resources that would otherwise be spent on medical bills. In a recent survey of individuals covered by Ohio’s Medicaid expansion, 59% of enrollees reported that it was easier to pay for groceries after enrollment, according to the state Department of Medicaid. Forty-eight percent said it was easier to pay their rent or mortgage, and 44% said it was easier to pay off debts. The study also found that the percentage of enrollees with medical debt declined by nearly half after enrolling in Medicaid. Read the Ohio Department of Medicaid’s full report, “Ohio Medicaid Group VIII Assessment” (PDF).
Anne Sunderland is the senior communications officer for CHCF’s Improving Access team, which works to improve access to coverage and care for low-income Californians.
Prior to joining CHCF, Anne was communications manager at the Public Health Institute (PHI). Working closely with PHI’s senior management, researchers, and project directors, Anne developed and implemented strategic communications initiatives to lift the visibility of PHI’s work to key policymakers, funders, and industry leaders. Anne brings experience in health care financing and delivery, with previous positions as an analyst at Blue Shield of California and a health planner at La Clínica de La Raza, a Bay Area federally qualified health center. She also served as senior editor at the Institute for Global Health at UCSF. Her writing on health issues has been published by the Institute of Medicine and the San Francisco Chronicle, among other outlets. Anne holds a bachelor’s degree in English from Dartmouth College and a master’s degree in public health from UC Berkeley.