Day 46 – Medicaid at 50: Financial health

Over the coming weeks this blog will highlight a key feature of Medicaid and the individual states that administer Medicaid and CHIP leading up the the program’s 50th anniversary (July 30th). Hopefully, you’ll learn some interesting facts about Medicaid and each of the 51 state programs.

More than 60% of bankruptcies in the United States are precipitated by medical bills, making health costs by far the leading cause of bankruptcy across the entire population. What’s more, this paper found a sharp increase in medically-related bankruptcies between 2001 and 2007. A more recent (2013) analysis had similar findings – including that 1 in 5 adults had trouble paying medical expenses during the course of a year. There is sobering evidence of patients who skimp on their meds due to cost, or have had to choose between medically necessary treatment and other material needs, like food and transportation. We can see where the Affordable Care Act got its name.

Insurance is a financial product intended to guard against the risk of impoverishment. There are arguments about how insurance products should be designed (ex. what should be covered, optimal cost-sharing), but protection against catastrophic events is a key feature of good insurance. It should come as no surprise, then, that Medicaid has a stabilizing effect on household economic security. The Oregon Health Insurance Experiment found that Medicaid decreased the probability of an unpaid medical bill being sent to collections by 25%. It’s good to see that Medicaid contributes to financial heath as well as physical health (more on the latter tomorrow…)

Source: http://www.nber.org/oregon/images/newresults/collect_share_admin.png
Source: http://www.nber.org/oregon/images/newresults/collect_share_admin.png
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