Research confirms that expanding Medicaid is good for the economic of low income people

By Dennis Archambault

The proponents of Healthy Michigan have not had much share of voice in the debate over work rules for the expanded Medicaid program. However, a recent University of Michigan Ross School of Business study has confirmed the economic benefit of the health insurance benefit for low income individuals and suggests that the proposed work rules would put thousands of unemployed enrollees at risk.

It’s interesting to read, in specific detail, what proponents of expanded Medicaid have felt for some time. On one hand, the target population is struggling and in debt. They also are likely to have a chronic disease, which requires regular medical care, if not urgent episodes of hospitalization. On the other hand, however, having their health insurance covered reduces the economic burden and makes it more likely that their health will be better managed.

Note some of the findings:

• Reduced the amount of medical bills in collections that the average enrollee had by 57 percent, or about $515.
• Reduced the amount of debt past due but not yet sent to a collection agency by 28 percent, or about $233.
• Led to a 16 percent drop in public records for financial events such as evictions, bankruptcies and wage garnishments; bankruptcies alone fell by 10 percent.
• Resulted in enrollees’ being 16 percent less likely to overdraw their credit cards.
• Led to improvement in individual credit scores, including the number with a “deep subprime” rating falling by 18 percent and the number listed as “subprime” falling by 3 percent.
• Allowed enrollees to engage in more borrowing to buy cars or other goods and services, which is consistent with better credit scores. Enrollees experienced a 21 percent increase in automotive loans. Other studies have found that Medicaid expansion reduced use of payday loans and reduced interest rates for low-income people.
• Helped people with chronic illnesses and those who had a hospitalization or emergency department visit during the study period with bigger reductions in their bills sent to collection and bigger increases in their credit scores.

Miller and colleagues published an academic report on the research in the Journal of Public Economics. Check that out for more details: https://www.sciencedirect.com/science/article/abs/pii/S0047272718300707.

Dennis Archambault is vice president, Public Affairs, at Authority Health.