Study: Medicaid expansion reduces medical debt

A study released this week found that the ACA, and in particular Medicaid expansion, appears to be leading to lower medical debt (Source: “Obamacare Seems to Be Reducing People’s Medical Debt,” New York Times, April 20, 2016).

The working paper from the National Bureau of Economic Research estimates that medical debt held by people newly covered by Medicaid since 2014 has been reduced by about $600 to $1,000 each year.

The study compared debt incurred in states that expanded Medicaid with states that either chose not to cover that popuation or had expanded their programs earlier. By focusing on the 25 percent of ZIP codes with the highest percentage of low-income, uninsured people before 2014, the researchers were able to compare debt incurred by people in the unchanged states with the debt of residents of states that offered new insurance options.

Over two years, they didn’t find major changes in every measure of financial distress. But Medicaid expansion did move the needle on the number of bills sent to collections and the amount of debt sent to collections.