The 2014 Medicaid Expansions & Personal Finance

Using a novel dataset from one of the major credit bureaus this work aims to study the effect of the 2014 Affordable Care Act (ACA) Medicaid expansions on personal finance. The data consist of a 2-percent random sample of individual consumers covering years 2010-2015, culled in September of each year, or approximately 5 million consumers per year. Outcomes studied span less common yet severe events, such as personal bankruptcy filings, as well as more common occurrences such as medical debt in collections, debt past due, and change in credit scores. Extending recent work by Mazumder and Miller (forthcoming), who studied the effects of the Massachusetts health care reform on financial stress, this work exploits two sources of variation to estimate the effect of the expansions on financial outcomes. The first source of variation is exposure to the Medicaid expansions immediately prior to implementation. Exposure is defined as the proportion of individuals with income below the Medicaid expansion income eligibility threshold who are also uninsured in a given county, by age group (ages 18-39 and 40-64). These data are from the US Census Bureau Model-based Small Area Health Insurance Estimates (SAIHE) program, and are merged with our credit bureau data. The second source of variation is that between states that expanded their Medicaid program compared with those that did not. That is, we estimate triple-difference models that interact the proxy for exposure to the expansions with binary indicators for the expansion time period and expansion states. Models control for county fixed effects and county-level unemployment, and variance estimates are clustered at the county level. Preliminary results indicate that a one percentage point decrease in the pre-expansion uninsured rate, among those Medicaid eligible, associates with: a 0.15 percentage point (2.00 percent) decrease in the probability of incurring medical debt in collections; a 0.48 percentage point (1.16 percent) decrease in the fraction of debt past due; an increase in credit scores by 0.133 points (0.02 percent); and a 0.01 percentage point (1.42 percent) decrease in the probability of bankruptcy. These results, combined with an estimated 7 percentage point reduction in the rate of uninsured in expansion states among the Medicaid eligible, implies that the expansions: decreased the probability of incurring medical debt in collections by 14.0 percent; decreased the fraction of debt past due by 8.1 percent; increased credit scores by 0.14 percent; and decreased the probability of bankruptcy by 9.9 percent. Given that our data series ends in September 2015 these results likely reflect the short-term effects of the expansions, yet they are generally consistent with the aforementioned work by Mazumder and Miller. Overall, our initial findings suggest that the ACA Medicaid expansions associate with improvements in individuals’ finances.