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Health Insurance and Young Adult Financial Distress

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Abstract

We study the financial effects of health insurance for young adults using the Affordable Care Act’s dependent coverage mandate as a source of exogenous variation. Using nationally repre-sentative, anonymized credit report and publicly available survey data on medical expenditures, we exploit the mandate’s implementation in 2010 and its automatic disenrollment mechanism at age 26. Our estimates show that increasing access to health insurance lowered young adults’ out-of-pocket medical expenditures, debt in third-party collections, and the probability of per-sonal bankruptcy. However, most improvements in financial outcomes are transitory, as they diminish after an individual ages out of the mandate at age 26.

Suggested Citation

  • Nathan Blascak & Vyacheslav Mikhed, 2022. "Health Insurance and Young Adult Financial Distress," Working Papers 19-54, Federal Reserve Bank of Philadelphia.
    • Handle: RePEc:fip:fedpwp:86687
    DOI: 10.21799/frbp.wp.2019.54
    Note: originally titled: Financial Consequences of Health Insurance: Evidence from the ACA’s Dependent Coverage Mandate on 2019-12-17. REVISED in August 2022 under new title.
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    File URL: https://www.philadelphiafed.org/-/media/frbp/assets/working-papers/2019/wp19-54.pdf
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    Cited by:

    1. Josh Blonz & Brigitte Roth Tran & Erin E. Troland, 2023. "The Canary in the Coal Decline: Appalachian Household Finance and the Transition from Fossil Fuels," NBER Working Papers 31072, National Bureau of Economic Research, Inc.
    2. Christa Gibbs & Benedict Guttman-Kenney & Donghoon Lee & Scott Nelson & Wilbert van der Klaauw & Jialan Wang, 2025. "Consumer Credit Reporting Data," Journal of Economic Literature, American Economic Association, vol. 63(2), pages 598-636, June.
    3. Bae, Hannah & Meckel, Katherine & Shi, Maggie, 2025. "Dependent insurance coverage and parental job lock: Evidence from the Affordable Care Act," Journal of Public Economics, Elsevier, vol. 248(C).

    More about this item

    Keywords

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    JEL classification:

    • D14 - Microeconomics - - Household Behavior - - - Household Saving; Personal Finance
    • I13 - Health, Education, and Welfare - - Health - - - Health Insurance, Public and Private
    • I18 - Health, Education, and Welfare - - Health - - - Government Policy; Regulation; Public Health

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