Effects of Losing Public Health Insurance on Healthcare Access, Household Finances, and Health Outcomes: Evidence from the TennCare Disenrollment

The presence and generosity of health insurance carried by a household have tremendous bearing on the household’s ability to weather adverse financial shocks from unforeseen health events. Hence, health insurance for at-risk populations has been of particular importance in the policy sphere. Nevertheless, there has been relatively scarce evidence on the effects of health insurance on the financial well-being of households. The most recent evidence use health insurance expansions (ACA and Massachusetts health reform) to study the impact on financial outcomes. We contribute to this literature by focusing on the effects of a public health insurance contraction on financial outcomes. In addition, we will present results from a previous paper on the effects of public health insurance on health outcomes. Tying these two findings can help us disentangle the mechanisms on how losing public health insurance can affect financial well-being.

We study this question under the context of one of the largest public health insurance disenrollments in the U.S.: the 2005 Tennessee disenrollment in which approximately 170,000 residents were dropped from the state’s Medicaid program, TennCare. This reform targeted non-elderly childless adults, an understudied population in the health insurance literature. This population is of particular interest since most of the recent Affordable Care Act (ACA) expansions target childless adults.

For the set of financial outcomes, we use a dose-response specification (similar to difference-in-difference), in which we identify the effects of the reform using variation across counties on the impact of the reform. Using administrative data on TennCare Enrollment we are able to tell how many people were enrolled in TennCare pre-reform and how many were dropped. We combined this information with the Federal Reserve Bank of New York’s Consumer Credit Panel/Equifax (CCP) which is a five percent nationally representative sample of individuals with credit reports to study financial outcomes. For the set of health outcomes, we use a triple difference strategy, for which we compare the differential in health outcomes between childless and non-childless adults in Tennessee to the same differential across other southern states, before and after the disenrollment. For this part we use the BRFSSS and restricted version of NHIS, both for the years 2000-2010.

We provide evidence that the TennCare disenrollment significantly decreased access to health care access; specifically, we estimate a 30 percent increase in the likelihood of forgone or delayed medical care due to cost. We provide suggestive evidence that disenrolled people are moving away from going to the doctor’s office and are starting to use emergency departments. The share of people coming to the ED and Inpatient that are uninsured also increases. Since some people are accessing care with no insurance, we find that this leads to a reduction in financial stability of the individuals. Our preferred dose-response model suggests that losing Medicaid eligibility reduces credit risk scores and increases the presence, share and number of accounts that are severely delinquent. The size of the effects are similar to the 2001 recession.