In the middle of a hotly contested governor's race in Michigan, TV ads remind voters that more than 680,000 of them “can now afford to see a doctor when they need one.”
Five years ago, state lawmakers approved a plan to let adults with incomes up to 133% of the federal poverty level sign up for Medicaid. As it turns out, the move allowed recipients to afford many other things.
In new research that's fallen under the radar despite healthcare being a flashpoint in the upcoming election, a University of Michigan economist found those who gained coverage through the state's Medicaid expansion faced fewer debt problems, evictions and bankruptcies, and saw their credit scores rise just years after enrolling for coverage.
Economist Sarah Miller said she was surprised that most enrollees earned about $4,000—far less than the federal poverty level of $16,000 per year and some brought in no income at all.
Using de-identified credit information on more than 330,000 Michiganders who enrolled in the first year of coverage, Miller and her colleagues at the Federal Reserve Bank of Chicago, the University of Illinois at Chicago and Northwestern University found that the average enrollee saw their medical debt fall by 57% or about $515 each. Cases of eviction, bankruptcy and wage garnishment fell by 16%. Credit scores with deep subprime ratings fell by 18%.
And the group that experienced the biggest financial boost? The chronically ill. The typical long-term Medicaid recipient tends to be older with more expensive claims and more of them. They are the chronically ill, unable to hold steady jobs.
Miller found that those with chronic conditions or who were admitted to a hospital or visited an emergency room during the study period saw fewer bills go to collection and enjoyed bigger spikes in their credit scores. Enrollees overall took on more car loans, and that is crucial to economic advancement.
In some areas of Michigan—like Detroit, which has a virtually non-existent public transit system, or in rural communities with little infrastructure—having a car could in and of itself result in social advancement.
For this person, the job market opens up. They now have the autonomy to travel out of food deserts. A car can transport someone out of a crime-ridden, polluted neighborhood into a better home.
So in just under four years, Medicaid expansion in Michigan, which cost around $20 million for the first two years before ballooning to $152 million last year after the federal government's share dropped, helped cure some enrollees of at least two factors that are known to affect the quality and length of a person's life: stress due to debt and lack of transportation.
In 2015, Yale University researchers examining the impact of Medicaid expansion in the 1980s found that those who gained insurance coverage in childhood paid more in cumulative taxes by age 28. They also collected less in earned income tax credits.
So what if we started thinking of Medicaid itself as a way to avoid cycles of poverty?
Gretchen Whitmer, the gubernatorial candidate whose TV ad touts her role in passing the expansion while she was a Democratic leader in the Michigan Senate, is in a close race with the state's former attorney general, Bill Schuette, who vigorously fought the expansion. If he wins, Schuette is expected to push for work requirements that current Gov. Rick Snyder said would be necessary to continue expanded Medicaid coverage.
The goal of conservatives in Michigan and seven other states asking for work rules is to scrub Medicaid rolls by requiring beneficiaries to either work or attend job training at least 80 hours a month. An estimated 700,000 would fail to meet this requirement, saving anywhere from $7 million to $22 million.
Based on that little-known research, those savings may be illusory. The best thing lawmakers could do to save money long term is to ensure residents are healthy and financially stable enough to get to a job.
