Study: Health Care Reform Likely to Reduce Bankruptcy and Catastrophic Debt


Today’s email brings word of an interesting new paper from Bhashkar Mazumder of the Chicago Fed and Sarah Miller of Notre Dame. They set out to measure the effect of the Massachusetts health care reform on bankruptcy and personal debt, a subject that’s topical for a number of reasons:

  • The Massachusetts plan is quite similar to Obamacare, so results from this study are suggestive of the impact that Obamacare will eventually have.
  • One of the primary purposes of universal health insurance is to relieve the financial stress of large unpaid medical bills.
  • Massachusetts is a good case study because its reform affected everyone, not just those below the poverty line.

The authors take advantage of the fact that health care reform had bigger effects on some groups than others. Most middle-aged people, for example, were already insured, so the Massachusetts reform affected them only modestly. Conversely, young people had relatively low insurance rates, so they were more heavily affected. Ditto for counties, some of which had higher initial rates of uninsurance than others.

The study exploits a very large data set of consumer finance based on reporting from credit bureaus, which provided a sample of nearly 400,000 individuals to look at. Its conclusion is unsurprising:

We find that the reform significantly improved credit scores, reduced the total amount past due, reduced the fraction of debt past due, and reduced the probability of personal bankruptcy. We find particularly pronounced reductions in the probability of having a large delinquency of over $5,000. These effects tend to be larger among individuals whose credit scores were low at the time of the reform, suggesting that the greatest gains in financial security occurred among those who were already struggling financially.

The charts below, excerpted from the study, illustrate the effect of health care reform, which was implemented in the period shown by the yellow bars. Despite the severe recession that followed, the amount of current debt stayed pretty flat while the amount of debt more than $10,000 past due declined sharply. Obamacare is not as universal as the Massachusetts reform, so its effects will probably be less pronounced. Nonetheless, it will not only provide routine health care for millions of Americans who aren’t currently getting it, it will also make their lives far less financially precarious. That sounds like a win to me.

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WHO DOESN’T LOVE A POSITIVE STORY—OR TWO?

“Great journalism really does make a difference in this world: it can even save kids.”

That’s what a civil rights lawyer wrote to Julia Lurie, the day after her major investigation into a psychiatric hospital chain that uses foster children as “cash cows” published, letting her know he was using her findings that same day in a hearing to keep a child out of one of the facilities we investigated.

That’s awesome. As is the fact that Julia, who spent a full year reporting this challenging story, promptly heard from a Senate committee that will use her work in their own investigation of Universal Health Services. There’s no doubt her revelations will continue to have a big impact in the months and years to come.

Like another story about Mother Jones’ real-world impact.

This one, a multiyear investigation, published in 2021, exposed conditions in sugar work camps in the Dominican Republic owned by Central Romana—the conglomerate behind brands like C&H and Domino, whose product ends up in our Hershey bars and other sweets. A year ago, the Biden administration banned sugar imports from Central Romana. And just recently, we learned of a previously undisclosed investigation from the Department of Homeland Security, looking into working conditions at Central Romana. How big of a deal is this?

“This could be the first time a corporation would be held criminally liable for forced labor in their own supply chains,” according to a retired special agent we talked to.

Wow.

And it is only because Mother Jones is funded primarily by donations from readers that we can mount ambitious, yearlong—or more—investigations like these two stories that are making waves.

About that: It’s unfathomably hard in the news business right now, and we came up about $28,000 short during our recent fall fundraising campaign. We simply have to make that up soon to avoid falling further behind than can be made up for, or needing to somehow trim $1 million from our budget, like happened last year.

If you can, please support the reporting you get from Mother Jones—that exists to make a difference, not a profit—with a donation of any amount today. We need more donations than normal to come in from this specific blurb to help close our funding gap before it gets any bigger.

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