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Health Care Reform and Household Financial Stability

posted by Pamela Foohey

Bhashkar Mazumder (Federal Reserve Bank of Chicago) and Sarah Miller (Notre Dame) have a new study out that examines the effect of Massachusett's major health care reform in 2006 on individuals' financial well-being. Similar to the Affordable Care Act, the law requires all Massachusetts residents to purchase health insurance meeting a minimum standard of coverage (if affordable) or pay a fee. Exploiting the variation in "stock" of uninsured residents pre- and post-reform, they use data from credit reports to assess whether the law improved financial outcomes across various dimensions.

In short, they find that the reform improved credit scores, reduced delinquencies, decreased the fraction of debt past due, and reduced the incidences of consumer bankruptcy filings. Their analysis also suggests that total amount of debt and third party collections decreased. And they further find that the effects are more pronounced for people with lower credit scores pre-reform, suggesting that the law provided greater financial security to individuals and families who already were struggling with their finances. These results highlight a few potential effects of the ACA: increased household financial stability, increased access to more affordable credit, and better debt collection outcomes for creditors.   

Hat tip to my (future) colleague, Sarah Jane Hughes, for pointing out the paper.


Having other people help pay your bills by socializing your risks tends to help your credit profile.

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