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The Effects of Medical Debt Relief: Evidence from Two Randomized Experiments

Author

Listed:
  • Raymond Kluender
  • Neale Mahoney
  • Francis Wong
  • Wesley Yin

Abstract

Two in five Americans have medical debt, nearly half of whom owe at least $2,500. Concerned by this burden, governments and private donors have undertaken large, high-profile efforts to relieve medical debt. We partnered with RIP Medical Debt to conduct two randomized experiments that relieved medical debt with a face value of $169 million for 83,401 people between 2018 and 2020. We track outcomes using credit reports, collections account data, and a multimodal survey. There are three sets of results. First, we find no impact of debt relief on credit access, utilization, and financial distress on average. Second, we estimate that debt relief causes a moderate but statistically significant reduction in payment of existing medical bills. Third, we find no effect of medical debt relief on mental health on average, with detrimental effects for some groups in pre-registered heterogeneity analysis.

Suggested Citation

  • Raymond Kluender & Neale Mahoney & Francis Wong & Wesley Yin, 2024. "The Effects of Medical Debt Relief: Evidence from Two Randomized Experiments," CESifo Working Paper Series 11074, CESifo.
    • Handle: RePEc:ces:ceswps:_11074
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    File URL: https://www.cesifo.org/DocDL/cesifo1_wp11074.pdf
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    More about this item

    Keywords

    debt relief; medical debt; health care; mental health; access to credit;
    All these keywords.

    JEL classification:

    • G51 - Financial Economics - - Household Finance - - - Household Savings, Borrowing, Debt, and Wealth
    • I10 - Health, Education, and Welfare - - Health - - - General
    • I18 - Health, Education, and Welfare - - Health - - - Government Policy; Regulation; Public Health

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