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Health insurance, medical debt, and financial well‐being

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  • Michael Batty
  • Christa Gibbs
  • Benedic Ippolito

Abstract

We study the financial protection provided by health insurance through two natural experiments—the Affordable Care Act's under 26 provision and Medicare eligibility. In both cases, the coverage expansion sharply reduces medical debt in collections for consumers within the affected ages but does not systematically improve credit outcomes not directly related to medical care. This is consistent with the infrequent repayment rate and lack of persistence on credit reports that we document for medical collections, which mute a key channel through which reductions in medical collections could directly affect the other financial outcomes studied here. These results help clarify the role of health insurance in broader financial health and suggest that, at least among the populations studied here, medical debts in collection may often be a symptom rather than a cause of wider financial distress as measured on credit reports.

Suggested Citation

  • Michael Batty & Christa Gibbs & Benedic Ippolito, 2022. "Health insurance, medical debt, and financial well‐being," Health Economics, John Wiley & Sons, Ltd., vol. 31(5), pages 689-728, May.
    • Handle: RePEc:wly:hlthec:v:31:y:2022:i:5:p:689-728
    DOI: 10.1002/hec.4472
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    1. Paul Goldsmith-Pinkham & Maxim L. Pinkovskiy & Jacob Wallace, 2020. "The Great Equalizer: Medicare and the Geography of Consumer Financial Strain," Staff Reports 911, Federal Reserve Bank of New York.

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