Study: ACA appears to lead to decreased medical debt

A new study shows low-income people who have gained insurance coverage under the Affordable Care Act have seen a significant reduction in their medical debt.

The study, published Monday as a working paper by the National Bureau of Economic Research, estimates that people newly covered by Medicaid since 2014 saw their medical debt reduced by about $600 to $1,000 each year.

Authors of the study said they believe Medicaid expansions under the ACA could play an important role in providing low-income individuals with financial protection by improving their ability to pay their medical expenses. After all, previous research shows financial consequences of not having health insurance can be severe for individuals who become seriously ill or injured.

Additionally, the authors said, expanded healthcare coverage may also have indirect effects on financial well-being. "Access to health insurance has the potential to improve access to credit markets, increase savings and facilitate consumption of other goods and services. These other channels can potentially have salutary effects on the well-being of low-income individuals," they wrote.

The study compared medical debt incurred by people in states that expanded their Medicaid programs in 2014 or after to those that either chose not to expand or had expanded their programs prior to 2014.

The authors' main finding was that Medicaid expansions that began in 2014 significantly reduced the number of unpaid non-medical bills and the amount of non-medical debt sent to third party collection agencies among people living in the 25 percent of ZIP codes with the highest percentage of low-income, uninsured people before 2014.

The researchers' estimate of $600 to $1,000 involved some back-of-the-envelope math, The New York Times notes, but it's a substantial amount of money given the context of a population earning less than $16,000 a year.

The New York Times notes the study also had some limitations, as it could look only at people who had a credit report, and couldn't tell whether any particular individual got Medicaid. Rather, researchers tracked people in the places where they anticipated the biggest changes in Medicaid enrollment. But researchers were confident their findings represent a real change in the financial circumstances of people who signed up for new Medicaid plans, according to The New York Times.


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