How Affordable Health Care Reduces Poverty and Payday Borrowing

October 6, 2017

Source: Flickr / Colin Dunn

Congress has long been bitterly divided over the subject of health care. A few weeks ago, Senate Republicans failed to pass the Graham-Cassidy bill, one of many attempts to “repeal and replace” the Affordable Care Act (ACA). Just prior to that, Vermont senator Bernie Sanders introduced a single-payer “Medicare for all” bill into the senate with sixteen co-sponsors. Both pieces of legislation raise questions about the role of government in providing health care to its citizens.

Two new studies supported by the Russell Sage Foundation’s special initiative on the Affordable Care Act (ACA) appear in the October issue of Health Affairs journal and discuss some of the effects of the ACA, which has been the most significant health care reform in decades. In one study, RSF grantees Dahlia Remler and Sanders Korenman (Baruch College), with Rosemary Hyson (Baruch College), investigate the effects of health insurance programs on poverty. The authors develop the first poverty measure in the US that takes into account the need for health care and find that public health services contribute to significant drops in poverty among people below the age of sixty-five. “Moreover,” they add, “Medicare, Medicaid and premium subsidies are among the most important antipoverty programs, accounting for over one-third of the poverty reduction from all public benefits for people in households without a disability recipient.” In other words, when using this health-inclusive poverty measure, a successful Congressional repeal of the ACA would result in people who benefited from either the ACA’s Medicaid expansions or premium subsidies falling into poverty.

Another study, by RSF grantees Heidi Allen (Columbia University) and Tal Gross (Boston University), with coauthors Ashley Swanson (University of Pennsylvania) and Jialan Wang (University of Illinois at Urbana-Champaign), explores how Medicaid expansions under the ACA affected the use of high-interest payday loans in California, a state which was an early adopter of the expansions. They find that over a period of two years, Medicaid expansions were associated with an 11 percent reduction in the number of payday loans taken out each month in California. Over this time, the number of unique payday borrowers each month and the amount of payday loan debt incurred by individuals also fell. As the authors write, “Medicaid expansion has improved access to high-quality health care, increased the use of outpatient and inpatient medical services, and improved the personal finances of low-income adults by reducing the number of medical bills subject to debt collection and by improving credit scores.” Like the previous study, this research highlights the ways that access to affordable health care improves the lives of low-income individuals for reasons beyond those strictly related to health.

Visit Health Affairs to read the full reports.

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