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Missouri’s Medicaid Contraction and Consumer Financial Outcomes

Author

Listed:
  • James Bailey
  • Nathan Blascak
  • Vyacheslav Mikhed

Abstract

In July 2005, a set of cuts to Medicaid eligibility and coverage went into effect in the state of Missouri. These cuts resulted in the elimination of the Medical Assistance for Workers with Disabilities program, more stringent eligibility requirements, and less generous Medicaid coverage for those who retained their eligibility. Overall, these cuts removed about 100,000 Missourians from the program and reduced the value of the insurance for the remaining enrollees. Using data from the Medical Expenditure Panel Survey, we show how these cuts increased out-of-pocket medical spending for individuals living in Missouri. Using data from the Federal Reserve Bank of New York/Equifax Consumer Credit Panel (CCP) and employing a border discontinuity differences-in-differences empirical strategy, we show that the Medicaid reform led to increases in both credit card borrowing and debt in third-party collections. When comparing our results with the broader literature on Medicaid and consumer finance, which has generally measured the effects of Medicaid expansions rather than cuts, our results suggest there are important asymmetries in the financial effects of shrinking a public health insurance program when compared with a public health insurance expansion.

Suggested Citation

  • James Bailey & Nathan Blascak & Vyacheslav Mikhed, 2020. "Missouri’s Medicaid Contraction and Consumer Financial Outcomes," Working Papers 20-42, Federal Reserve Bank of Philadelphia.
  • Handle: RePEc:fip:fedpwp:88998
    DOI: 10.21799/frbp.wp.2020.42
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    More about this item

    Keywords

    Medicaid; health insurance; consumer credit;
    All these keywords.

    JEL classification:

    • I13 - Health, Education, and Welfare - - Health - - - Health Insurance, Public and Private
    • I18 - Health, Education, and Welfare - - Health - - - Government Policy; Regulation; Public Health
    • G51 - Financial Economics - - Household Finance - - - Household Savings, Borrowing, Debt, and Wealth
    • G52 - Financial Economics - - Household Finance - - - Insurance

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