States that expanded Medicaid saw drop in medical debt, U study finds

The federal health law's Medicaid expansion delivered a degree of economic stability to low-income Americans in states that adopted the program, according to a new report from University of Minnesota researchers.

Low-income residents in states like Minnesota that expanded eligibility for Medicaid coverage saw a bigger decline in unpaid medical bills between 2012 and 2015 than people living in states that didn't expand coverage, according to the study published in a blog by the journal Health Affairs.

What's more, researchers found that satisfaction with their financial situation improved at a faster rate among low-income residents in Medicaid-expansion states during the time period.

"What we see in Minnesota is that the patterns are similar to what they are nationally," said Aaron Sojourner, a labor economist and assistant professor at the University of Minnesota's Carlson School of Management. "Coverage increases, unpaid medical debt falls and financial satisfaction increases."

The study suggests a link between Medicaid and less medical debt, but can't prove one caused the other.

Medicaid is the state-federal program that provides health insurance for many groups, including people who live at or below the poverty line. The federal Affordable Care Act (ACA) gave states the option to expand eligibility for the program, with roughly half of all states fully doing so by 2015.

To gauge the impact, researchers analyzed data from an annual survey called the National Financial Capability Study, which is a collaboration between the U.S. Department of Treasury and the FINRA Investor Education Fund.

The findings are important, researchers said, given Republican proposals that could repeal and replace the ACA.

"Our results suggest that Republican proposals would threaten the improvements to financial well-being that low-income Americans experienced under the ACA's Medicaid expansion," they wrote.

It makes sense that low-income Americans in expansion states might have seen benefits in their financial situation given the billions of dollars being plowed into Medicaid coverage under the ACA, said Peter Nelson of the Center of the American Experiment, a conservative think tank in Golden Valley.

But Nelson resisted the idea that the findings argue against Republican proposals, which he said would not eliminate Medicaid but would instead bring needed reform.

"This paper simply states really the obvious" in showing financial improvements for low-income people, Nelson said. "You can't look at that in isolation. There are other competing factors at play here to decide whether that's a good policy or not."