Debt collection agencies' biggest problem: Medicaid expansion

U.S. counties that had high uninsured rates prior to the implementation of the Affordable Care Act have seen per capita collection balances fall if their state expanded Medicaid.

That finding comes from researchers at the Federal Reserve Bank of New York. Analysts there found a significant difference between indebtedness trends in states that expanded Medicaid versus those that have not.

Researchers examined data from the Federal Reserve Bank of New York's Consumer Credit Panel, which includes a wide array of financial indicators for individuals across the country drawn from Equifax credit report data.

Researchers' variable of interest was the total value of balances sent to a third-party collection agency within 12 months. The study revealed that the quintile of counties with the highest rates of uninsured saw the largest improvement in this metric following Medicaid expansion.

The analysts said their findings are consistent with prior research that provided evidence that health insurance is good for individual finances. However, they said it is important to note that their analysis only focuses on the benefits of Medicaid expansion and not the associated costs.

"While the full effects of the ACA on financial health are yet to be seen, and while the effects of the ACA — positive or negative — are not restricted to financial health, we offer suggestive early evidence that the Medicaid expansion is fulfilling the goal of health insurance: providing 'peace of mind' by protecting against financial hardship," the analysts concluded.

More articles on healthcare finance:

Florida hospital's future uncertain as owner struggles to keep utilities on
John Oliver forgives $15M in medical debt
Los Angeles hospital files for bankruptcy as cash collections fall short

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