WI22-12: Health, Health Insurance, and Financial Security

Abstract

The recent rise in economic hardship highlights the need to prepare for financial emergencies. Even before the pandemic, many lacked savings for unexpected expenses, retirement, or other goals; many experienced financial problems from poor health, uninsurance, and/or medical expenses. This was especially true for low-income and/or non-white households who, on average, have worse health and less wealth.This project examines how health insurance affects economic security for those near retirement, defined as individuals aged 45 through 64, but not yet Medicare-eligible. We test if Medicaid improved financial well-being, emergency savings, and retirement preparation before and during the COVID-19 pandemic by using differences in Medicaid eligibility based on state adoptions of the Medicaid expansion contained in the Affordable Care Act (ACA). Using the 2013 through 2019 Survey of Household Economics and Decisionmaking (SHED), we find that Medicaid coverage increased after state expansions of Medicaid, particularly for historically disadvantaged and vulnerable subpopulations. However, we do not find causal evidence that expanded Medicaid access significantly improved financial well-being in several dimensions for households near retirement, either for the population overall or for the specific subpopulations of interest. Examining the pandemic time period with the Census Household Pulse data, we do find that states that expanded Medicaid fared better in terms of financial hardship measures than individuals in states that did not expand Medicaid.