IDEAS home Printed from https://ideas.repec.org/p/fip/fedpwp/86687.html
   My bibliography  Save this paper

Health Insurance and Young Adult Financial Distress

Author

Listed:
  • Nathan Blascak
  • Vyacheslav Mikhed

Abstract

We study the financial effects of health insurance for young adults using the Affordable Care Act’s dependent coverage mandate as a source of exogenous variation. Using nationally repre-sentative, anonymized credit report and publicly available survey data on medical expenditures, we exploit the mandate’s implementation in 2010 and its automatic disenrollment mechanism at age 26. Our estimates show that increasing access to health insurance lowered young adults’ out-of-pocket medical expenditures, debt in third-party collections, and the probability of per-sonal bankruptcy. However, most improvements in financial outcomes are transitory, as they diminish after an individual ages out of the mandate at age 26.

Suggested Citation

  • Nathan Blascak & Vyacheslav Mikhed, 2022. "Health Insurance and Young Adult Financial Distress," Working Papers 19-54, Federal Reserve Bank of Philadelphia.
  • Handle: RePEc:fip:fedpwp:86687
    DOI: 10.21799/frbp.wp.2019.54
    Note: originally titled: Financial Consequences of Health Insurance: Evidence from the ACA’s Dependent Coverage Mandate on 2019-12-17. REVISED in August 2022 under new title.
    as

    Download full text from publisher

    File URL: https://www.philadelphiafed.org/-/media/frbp/assets/working-papers/2019/wp19-54.pdf
    Download Restriction: no

    File URL: https://libkey.io/10.21799/frbp.wp.2019.54?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    Other versions of this item:

    References listed on IDEAS

    as
    1. Silvia Helena Barcellos & Mireille Jacobson, 2015. "The Effects of Medicare on Medical Expenditure Risk and Financial Strain," American Economic Journal: Economic Policy, American Economic Association, vol. 7(4), pages 41-70, November.
    2. Jonathan Gruber & Aaron Yelowitz, 1999. "Public Health Insurance and Private Savings," Journal of Political Economy, University of Chicago Press, vol. 107(6), pages 1249-1274, December.
    3. Bhashkar Mazumder & Sarah Miller, 2016. "The Effects of the Massachusetts Health Reform on Household Financial Distress," American Economic Journal: Economic Policy, American Economic Association, vol. 8(3), pages 284-313, August.
    4. David M. Cutler & Amy Finkelstein & Kathleen McGarry, 2008. "Preference Heterogeneity and Insurance Markets: Explaining a Puzzle of Insurance," American Economic Review, American Economic Association, vol. 98(2), pages 157-162, May.
    5. Bradley Heim & Ithai Lurie & Kosali Simon, 2018. "Did the Affordable Care Act Young Adult Provision Affect Labor Market Outcomes? Analysis Using Tax Data," ILR Review, Cornell University, ILR School, vol. 71(5), pages 1154-1178, October.
    6. Barbaresco, Silvia & Courtemanche, Charles J. & Qi, Yanling, 2015. "Impacts of the Affordable Care Act dependent coverage provision on health-related outcomes of young adults," Journal of Health Economics, Elsevier, vol. 40(C), pages 54-68.
    7. James Bailey & Anna Chorniy, 2016. "Employer-Provided Health Insurance And Job Mobility: Did The Affordable Care Act Reduce Job Lock?," Contemporary Economic Policy, Western Economic Association International, vol. 34(1), pages 173-183, January.
    8. Paul Goldsmith-Pinkham & Maxim L. Pinkovskiy & Jacob Wallace, 2020. "The Great Equalizer: Medicare and the Geography of Consumer Financial Strain," Staff Reports 911, Federal Reserve Bank of New York.
    9. Dana Goldman & Nicole Maestas, 2013. "Medical Expenditure Risk And Household Portfolio Choice," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 28(4), pages 527-550, June.
    10. Yaa Akosa Antwi & Asako S. Moriya & Kosali Simon, 2013. "Effects of Federal Policy to Insure Young Adults: Evidence from the 2010 Affordable Care Act's Dependent-Coverage Mandate," American Economic Journal: Economic Policy, American Economic Association, vol. 5(4), pages 1-28, November.
    11. Sarah Miller & Luojia Hu & Robert Kaestner & Bhashkar Mazumder & Ashley Wong, 2021. "The ACA Medicaid Expansion in Michigan and Financial Health," Journal of Policy Analysis and Management, John Wiley & Sons, Ltd., vol. 40(2), pages 348-375, March.
    12. Carlos Dobkin & Amy Finkelstein & Raymond Kluender & Matthew J. Notowidigdo, 2018. "The Economic Consequences of Hospital Admissions," American Economic Review, American Economic Association, vol. 108(2), pages 308-352, February.
    13. Gross, Tal & Notowidigdo, Matthew J., 2011. "Health insurance and the consumer bankruptcy decision: Evidence from expansions of Medicaid," Journal of Public Economics, Elsevier, vol. 95(7-8), pages 767-778, August.
    14. Barton Willage, 2020. "Unintended consequences of health insurance: Affordable Care Act's free contraception mandate and risky sex," Health Economics, John Wiley & Sons, Ltd., vol. 29(1), pages 30-45, January.
    15. James Bailey, 2017. "Health insurance and the supply of entrepreneurs: new evidence from the affordable care act," Small Business Economics, Springer, vol. 49(3), pages 627-646, October.
    16. Meta Brown & John Grigsby & Wilbert van der Klaauw & Jaya Wen & Basit Zafar, 2016. "Financial Education and the Debt Behavior of the Young," The Review of Financial Studies, Society for Financial Studies, vol. 29(9), pages 2490-2522.
    17. Depew, Briggs & Bailey, James, 2015. "Did the Affordable Care Act's dependent coverage mandate increase premiums?," Journal of Health Economics, Elsevier, vol. 41(C), pages 1-14.
    18. Argys, Laura M. & Friedson, Andrew I. & Pitts, M. Melinda & Tello-Trillo, D. Sebastian, 2020. "Losing public health insurance: TennCare reform and personal financial distress," Journal of Public Economics, Elsevier, vol. 187(C).
    19. Padmaja Ayyagari & Daifeng He, 2017. "The Role of Medical Expenditure Risk in Portfolio Allocation Decisions," Health Economics, John Wiley & Sons, Ltd., vol. 26(11), pages 1447-1458, November.
    20. Laurence J. Kotlikoff, 1989. "What Determines Savings?," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262611872, April.
    21. Michael Anderson & Carlos Dobkin & Tal Gross, 2012. "The Effect of Health Insurance Coverage on the Use of Medical Services," American Economic Journal: Economic Policy, American Economic Association, vol. 4(1), pages 1-27, February.
    22. Dahlen, H.M., 2015. ""Aging out" of dependent coverage and the effects on us labor market and health insurance choices," American Journal of Public Health, American Public Health Association, vol. 105, pages 640-650.
    23. Brevoort, Kenneth & Grodzicki, Daniel & Hackmann, Martin B., 2020. "The credit consequences of unpaid medical bills," Journal of Public Economics, Elsevier, vol. 187(C).
    24. Peter Debbaut & Andra Ghent & Marianna Kudlyak, 2016. "The CARD Act and Young Borrowers: The Effects and the Affected," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 48(7), pages 1495-1513, October.
    25. Phillip B. Levine & Robin McKnight & Samantha Heep, 2011. "How Effective Are Public Policies to Increase Health Insurance Coverage among Young Adults?," American Economic Journal: Economic Policy, American Economic Association, vol. 3(1), pages 129-156, February.
    26. Hu, Luojia & Kaestner, Robert & Mazumder, Bhashkar & Miller, Sarah & Wong, Ashley, 2018. "The effect of the affordable care act Medicaid expansions on financial wellbeing," Journal of Public Economics, Elsevier, vol. 163(C), pages 99-112.
    27. Michael L. Anderson & Carlos Dobkin & Tal Gross, 2014. "The Effect of Health Insurance on Emergency Department Visits: Evidence from an Age-Based Eligibility Threshold," The Review of Economics and Statistics, MIT Press, vol. 96(1), pages 189-195, March.
    28. Akosa Antwi, Yaa & Moriya, Asako S. & Simon, Kosali I., 2015. "Access to health insurance and the use of inpatient medical care: Evidence from the Affordable Care Act young adult mandate," Journal of Health Economics, Elsevier, vol. 39(C), pages 171-187.
    29. Lee, Daeyong, 2016. "Effects of dependent coverage mandate on household precautionary savings: Evidence from the 2010 Affordable Care Act," Economics Letters, Elsevier, vol. 147(C), pages 32-37.
    30. David J G Slusky, 2017. "Significant Placebo Results in Difference-in-Differences Analysis: The Case of the ACA’s Parental Mandate," Eastern Economic Journal, Palgrave Macmillan;Eastern Economic Association, vol. 43(4), pages 580-603, September.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Josh Blonz & Brigitte Roth Tran & Erin E. Troland, 2023. "The Canary in the Coal Decline: Appalachian Household Finance and the Transition from Fossil Fuels," NBER Working Papers 31072, National Bureau of Economic Research, Inc.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Michael R. Richards & Sebastian Tello‐Trillo, 2021. "Private coverage mandates, business cycles, and provider treatment intensity," Health Economics, John Wiley & Sons, Ltd., vol. 30(5), pages 1200-1221, May.
    2. Fone, Zachary S. & Friedson, Andrew I. & Lipton, Brandy & Sabia, Joseph J., 2020. "The Dependent Coverage Mandate Took a Bite Out of Crime," IZA Discussion Papers 12968, Institute of Labor Economics (IZA).
    3. Lee, Daeyong, 2018. "Effects of health insurance coverage on household financial portfolio: Evidence from the Affordable Care Act," Economics Letters, Elsevier, vol. 171(C), pages 176-179.
    4. Sarah Miller & Luojia Hu & Robert Kaestner & Bhashkar Mazumder & Ashley Wong, 2021. "The ACA Medicaid Expansion in Michigan and Financial Health," Journal of Policy Analysis and Management, John Wiley & Sons, Ltd., vol. 40(2), pages 348-375, March.
    5. Barış K. Yörük & Linna Xu, 2019. "Impact of the ACA’s Dependent Coverage Mandate on Health Insurance and Labor Market Outcomes Among Young Adults: Evidence from Regression Discontinuity Design," Eastern Economic Journal, Palgrave Macmillan;Eastern Economic Association, vol. 45(1), pages 58-86, January.
    6. Michael Batty & Christa Gibbs & Benedic Ippolito, 2022. "Health insurance, medical debt, and financial well‐being," Health Economics, John Wiley & Sons, Ltd., vol. 31(5), pages 689-728, May.
    7. Yörük Barış K., 2018. "Health insurance coverage and health care utilization: Evidence from the Affordable Care Act’s dependent coverage mandate," Forum for Health Economics & Policy, De Gruyter, vol. 21(2), pages 1-24, December.
    8. David J G Slusky, 2017. "Significant Placebo Results in Difference-in-Differences Analysis: The Case of the ACA’s Parental Mandate," Eastern Economic Journal, Palgrave Macmillan;Eastern Economic Association, vol. 43(4), pages 580-603, September.
    9. Michael S. Kofoed & Wyatt J. Frasier, 2019. "[Job] Locked and [Un]loaded: The Effect of the Affordable Care Act Dependency Mandate on Reenlistment in the U.S. Army," Upjohn Working Papers 19-300, W.E. Upjohn Institute for Employment Research.
    10. Jungtaek Lee, 2018. "Effects of health insurance coverage on risky behaviors," Health Economics, John Wiley & Sons, Ltd., vol. 27(4), pages 762-777, April.
    11. Tu T. Nguyen & Barış K. Yörük, 2020. "Aging out of dependent coverage and the effects on the use of inpatient medical care," International Journal of Health Economics and Management, Springer, vol. 20(4), pages 381-390, December.
    12. Bradley Heim & Ithai Lurie & Kosali Simon, 2015. "The Impact of the Affordable Care Act Young Adult Provision on Labor Market Outcomes: Evidence from Tax Data," Tax Policy and the Economy, University of Chicago Press, vol. 29(1), pages 133-157.
    13. Joelle Abramowitz, 2018. "Planning parenthood: the Affordable Care Act young adult provision and pathways to fertility," Journal of Population Economics, Springer;European Society for Population Economics, vol. 31(4), pages 1097-1123, October.
    14. Samuel Dodini, 2023. "Insurance Subsidies, the Affordable Care Act, and Financial Stability," Journal of Policy Analysis and Management, John Wiley & Sons, Ltd., vol. 42(1), pages 97-136, January.
    15. Gopi Shah Goda & Monica Farid & Jay Bhattacharya, 2016. "The Incidence of Mandated Health Insurance: Evidence from the Affordable Care Act Dependent Care Mandate," NBER Working Papers 21846, National Bureau of Economic Research, Inc.
    16. Juergen Jung & Vinish Shrestha, 2018. "The Affordable Care Act And College Enrollment Decisions," Economic Inquiry, Western Economic Association International, vol. 56(4), pages 1980-2009, October.
    17. Barbaresco, Silvia & Courtemanche, Charles J. & Qi, Yanling, 2015. "Impacts of the Affordable Care Act dependent coverage provision on health-related outcomes of young adults," Journal of Health Economics, Elsevier, vol. 40(C), pages 54-68.
    18. Bradley Heim & Ithai Lurie & Kosali Simon, 2018. "Did the Affordable Care Act Young Adult Provision Affect Labor Market Outcomes? Analysis Using Tax Data," ILR Review, Cornell University, ILR School, vol. 71(5), pages 1154-1178, October.
    19. Cortnie Shupe, 2023. "Public Health Insurance and Medical Spending: The Incidence of the ACA Medicaid Expansion," Journal of Policy Analysis and Management, John Wiley & Sons, Ltd., vol. 42(1), pages 137-165, January.
    20. Gaviria Garcés, Carlos Felipe & De la Mata, Dolores, 2016. "Losing health insurance when young: Impacts on usage of medical services and health in Colombia," Papeles en Salud 15113, Ministerio de Salud y Protección Social.

    More about this item

    Keywords

    health insurance; consumer credit; financial outcomes; Affordable Care Act (ACA);
    All these keywords.

    JEL classification:

    • D14 - Microeconomics - - Household Behavior - - - Household Saving; Personal Finance
    • I13 - Health, Education, and Welfare - - Health - - - Health Insurance, Public and Private
    • I18 - Health, Education, and Welfare - - Health - - - Government Policy; Regulation; Public Health

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:fip:fedpwp:86687. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Beth Paul (email available below). General contact details of provider: https://edirc.repec.org/data/frbphus.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.