Readers of Say Ahhh! know that Medicaid coverage increases economic security for families. This week, I am reading studies specifically on the Medicaid expansion and how it contributes to economic security. The expansion is only a few years old; the data and the research are still in their beginning stages. Still, this new and expanding body of research continues to show how the expansion improves families’ economic security.

Health Affairs’ Early Medicaid Expansion Associated With Reduced Payday Borrowing In California

The authors examine the effect of the Medicaid expansion on payday borrowing by comparing trends in early expansion counties in California to counties across the country that did not expand Medicaid early. Payday loans are a form of high interest borrowing used by mostly low and middle income populations. Evidence shows that some consumers would be better off without these loans.

What it finds

• Early Medicaid expansion was associated with an 11% reduction in the number of payday loans taken out each month by adults younger than 65. It also reduced the number of borrowers each month and the total amount of payday loan debt.
• The reduction in the number of loans per month was entirely driven by borrowers younger than age 50. Borrowers between the ages of 18 and 34 had a reduction of 21%, the largest for any age category.
• Counties with the highest share of uninsured individuals with incomes below 138% FPL had larger declines in the number of loans, dollars of loans and number of unique borrowers compared to counties with the lowest share of uninsured individuals with incomes below 138% FPL.

Why it matters

• Results indicate that the expansion particularly improved the financial situation of individuals who are poor and uninsured, and young adults (ages 18-34).
• The study shows how the expansion reduced the demand for payday loans, and how this benefitted the financial health of families.

Medical Care Research and Review’s The Affordable Care Act Medicaid Expansions and Personal Finance

Researchers from the Urban Institute looked at the early impacts on personal finance as a result of the Medicaid expansion. They used credit bureau data and note that only individuals who interact with the formal credit market are included in the data set.

What it finds

• States that expanded Medicaid saw overall financial improvements such as improved credit scores, reduced balances past due as a percent of total debt and a reduction in the likelihood of bankruptcy.
• These states also had improvements regarding medical bills. There was a reduction in the probability of a medical collection of $1,000 or more and of having a medical bill go to collection.

Why it matters

• The authors note that these results are just the start. The data used in the study reflect a maximum of only 1.5 years after the expansion. The effects will likely increase over time as more years of data become available.
• The study suggests that the Medicaid expansion provides meaningful financial protection to families.

Find more Research Updates here.