The expansion of Medicaid under the Affordable Care Act is reducing medical debt in collections for some low-income consumers, according to a study from the National Bureau of Economic Research (NBER).
"The Effect of the Patient Protection and Affordable Care Act Medicaid Expansions on Financial Well-Being," evaluated the amount of debt sent to third-party agencies in areas with high populations of low-income consumers. The NBER report states that the results build on studies about Medicaid expansion by looking at the impact on low-income adults in the U.S. with data from the Federal Reserve Bank of New York Consumer Credit Panel/Equifax.
"Our estimates imply a reduction in collection balances of around $600 to $1,000 among those who gain Medicaid coverage due to the [Affordable Care Act,]" according to the report’s authors, who include Luoija Hu, Ashley Wong and Bhashkar Mazumder from the Federal Reserve Bank of Chicago; Sarah Miller from the University of Michigan and Robert Kaestner from the University of Illinois.Twenty-nine states and the District of Columbia chose to expand Medicaid coverage in some form by the end of 2015 and 21 states opted not to expand the coverage.
"Our main finding is the Medicaid expansions that began in 2014 significantly reduced the number of unpaid non-medical bills and the amount of non-medical debt sent to third-party collection agencies among people living in zip codes that are most likely affected by the expansions,” the report states.
The full report from the NBER is available here.