Affordable Care Act boosts low-income people

ANN ARBOR--The Affordable Care Act was designed to increase both health insurance and access to health care while reducing the burden of out-of-pocket medical bills.

The legislation has become a polarizing political issue, and 21 states have opted out of the Medicaid expansion available under the law. But the question remains: Is it working as intended?

New research from Sarah Miller, assistant professor of business economics at the University of Michigan Ross School of Business, indicates it appears it is on several levels.

A study of credit report data shows the ACA is having a positive financial effect for low-income people in states that expanded Medicaid. Miller and colleagues compared credit report data--bills for things like cars, credit cards and utilities--among low-income zip codes in states that expanded Medicaid to those that did not.

They found that people in states that expanded Medicaid paid more bills on time and were sent to collection agencies less often than those in states that didn’t expand Medicaid. They also found the amount of late payments were lower.

It’s the first national study that evaluates how public health insurance coverage for non-elderly adults affects financial well-being.

"Having health care coverage is important for health reasons, of course, but it’s also important because it can protect you from these big financial hits if you have to visit the emergency room or stay in the hospital," Miller said. "People don’t have to empty their savings account, sell their cars or simply not pay other bills."

Miller said the positive financial effects also extend to the wider economy in states that have expanded Medicaid.

"This also lessens the risk for companies that are collecting payments from people who now have coverage," she said. "The benefits extend beyond the traditional areas of public health and use of preventative care."

The findings are detailed in the National Bureau of Economic Research working paper "The Effect of the Patient Protection and Affordable Care Act Medicaid Expansions on Financial Well-Being." Co-authors are Luojia Hu, Bhashkar Mazumder and Ashley Wong of the Federal Reserve Bank of Chicago, and Robert Kaestner of the University of Illinois.

Another new study from Miller shows that Medicaid expansion also led to higher rates of insurance coverage, improved quality of coverage, increased utilization of health care and higher rates of diagnosis of chronic health conditions for low-income adults.

Miller and colleague Laura Wherry of the David Geffen School of Medicine at UCLA examined National Health Survey data among low-income people and compared the results from states that expanded Medicaid to those that did not.

They found not only were more low-income people insured in the states that expanded Medicaid, but more felt their quality of care was better. More importantly, people were utilizing it. The results suggest people were able to find doctors and get preventative care.

"We realize it’s controversial legislation, and people feel strongly about it," Miller said. "But if the goal is to get people to the doctor and get them the care they need, it looks like that’s indeed happening. There are fewer uninsured people in the states that expanded Medicaid, and they are able to access and use health care, which was a nagging concern. "

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