The effect of health insurance coverage on personal bankruptcy: evidence from the Medicaid expansion

Masanori Kuroki ()
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Masanori Kuroki: Arkansas Tech University

Review of Economics of the Household, 2021, vol. 19, issue 2, No 8, 429-451

Abstract: Abstract This paper investigates the effects of health insurance coverage among low-income people on personal bankruptcies at the county level and the state level, based on the hypothesis that having health insurance reduces the risk of medical out-of-pocket spending and consequently decreases the likelihood of financial distress. In order to estimate the causal effects of health insurance coverage on personal bankruptcy, I exploit the Medicaid expansion under the Affordable Care Act as a source of exogenous variation in health insurance coverage and use it as an instrumental variable. Using bankruptcy filings from the US Court, I find that an increase in the share of low-income people with health insurance reduces Chapter 7 bankruptcy rates both at the county level and state level. The implied magnitudes of my estimated impacts are quantitatively important.

Keywords: Bankruptcy; Personal finance; Health; Medical expense; Health insurance (search for similar items in EconPapers)
JEL-codes: D14 H75 I10 I13 (search for similar items in EconPapers)
Date: 2021
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Citations: View citations in EconPapers (2)

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DOI: 10.1007/s11150-020-09492-0

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