Co-funded with the Robert Wood Johnson Foundation
Prior to the Affordable Care Act (ACA), approximately 41 percent of working-age individuals struggled with medical bills and/or medical debt, and those in low- and moderate-income (LMI) households were at greater financial risk. Compared to households at higher income levels that nearly exclusively use banks, LMI households often use alternative financial service (AFS) transaction and credit products. AFS transaction products include non-bank remittances, check cashing services, and money orders; AFS credit products include payday loans, pawn loans, auto-title loans, tax refund anticipation loans, rent-to-own contracts, etc.
Economists Katie Fitzpatrick and Anna Fitzpatrick will examine the extent to which the ACA affected the decisions of LMI households to use AFS products. They will study whether expanding Medicaid coverage decreased the demand for AFS products by providing protection from large medical bills and increasing the financial inclusion of low-income households in the mainstream financial system. They will also explore whether the the need for AFS products changed due to the higher quality plans offered in the individual market to those previously uninsured.