In 2005, the 194 members of the World Health Organization, including the United States, committed to achieving universal health coverage as a Sustainable Development Goal. To meet the mark, UHC must not only provide equitable access, but also protect people accessing health care from financial harm. Lawmakers intended the Affordable Care Act as a step toward universal health coverage in the United States. Prior to the ACA, nearly 40% of Americans reported delaying needed health care due to cost concerns, having outstanding medical debt, and depleting their savings trying to pay off medical bills.
These markers of financial harm have improved since the ACA fully took effect in 2014, but a recent study shows that financial protections – measured by medical debt collections, overall debt collections, past due debt, and bankruptcy – were not as robust in states that chose not to expand Medicaid. Even before Medicaid expansion, the study showed that credit scores were worse and debt was higher in nonexpansion states, suggesting higher poverty and financial insecurity in areas without access to Medicaid expansion. However, the gap increased after 2014 as residents of expansion states benefited from a bigger improvement in their financial health.
The study looked at finances for all residents, not only those gaining Medicaid coverage, and the positive financial impact was likely much higher for Medicaid beneficiaries alone. While Medicaid typically does not charge premiums or copays, the other path to healthcare coverage under the ACA, Marketplace plans, have higher deductibles than employer-sponsored insurance and may have worsened financial health. Low-income Marketplace participants were protected from the majority of the deductibles and out-of-pocket costs by cost-sharing reductions. However, President Trump’s executive order signed in mid-October threatens to stop funding these payments. We will need to monitor the effects of this change, but despite some improvements made by Medicaid expansion, protection from financial harm due to healthcare costs appears to remain elusive for many living in the United States.
commentary by Laura Medford-Davis
Using a novel data set from a major credit bureau, we examine the early effects of the Affordable Care Act Medicaid expansions on personal finance. We analyze less common events such as personal bankruptcy, and more common occurrences such as medical collection balances, and change in credit scores. We estimate triple-difference models that compare individual outcomes across counties that expanded Medicaid versus counties that did not, and across expansion counties that had more uninsured residents versus those with fewer. Results demonstrate financial improvements in states that expanded their Medicaid programs as measured by improved credit scores, reduced balances past due as a percent of total debt, reduced probability of a medical collection balance of $1,000 or more, reduced probability of having one or more recent medical bills go to collections, reduction in the probability of experiencing a new derogatory balance of any type, reduced probability of incurring a new derogatory balance equal to $1,000 or more, and a reduction in the probability of a new bankruptcy filing.