In a recent article in the Bulletin of Economic Research, LaBerge and Djiffa estimate the impact of Medicaid Expansion on bankruptcy rates in the United States. They use a variety of methods to arrive at roughly the same result:
Between 2008 and 2017, the overall unadjusted bankruptcy filing rate fell from 0.36% to 0.24%. We found that the expansion was associated with a decrease in overall consumer
bankruptcy varying between 0.035 and 0.039 percentage points and that the intensity of the effect was modulated by the intensity of the treatment. Results were consistent across models…
Between a quarter and a third of the decline in personal bankruptcy filings in the United States during this time frame could be attributed to Medicaid Expansion.
This makes sense. Medicaid pays medical expenses. Medical expenses tend to concentrate when everything else in one’s life is also going to shit. Medical expenses tend to correlate well to lost income from unemployment or underemployment, it tends to correlate well to additional compensatory expenses. When individuals have a payer of last resort which is what Medicaid does, it removes a substantial economic burden.
This finding is not surprising. The Oregon Medicaid lottery study examined individuals who won a lottery for Medicaid versus those who entered but did not win a Medicaid slot. One of the immediate first year results was a substantial decrease in financial stress.
Health insurance is insurance for large medical expenses, so we should not be surprised that it works.
Yarrow
This result seems like it should be completely obvious. Good to see a report on it.
rikyrah
Enjoy reading things that makes sense…in black and white.
JeanneT
I’ve been studying up on Michigan’s requirements for qualifying for Medicaid – not for health insurance but for medicaid waiver benefits for assisted living care. What I took away from my reading is that it is challenging to qualify for Medicaid health insurance and darned hard to keep it unless you’re on a predictable fixed income. When people qualify, the program makes a huge difference – but seems to me that the bureaucratic demands are onerous.
(FWIW, my MIL does not qualify for the Medicaid waiver benefits here in MI. She’s $140 over the monthly income limit.)
Yarrow
David, do you know anything about traditional Medicare vs Medicare Advantage plans? I know some retirees whose retiree benefits included supplemental health insurance and recently the companies switched the retiree health insurance benefit from a supplement to a Medicare Advantage plan. It’s my understanding that you get to “try out” the MA plans for a year and if you don’t like them you can go back to traditional Medicare but once you’re past that year you’re stuck with a MA plan forever. That seems really wrong to me. It also seems like an attempt to slowly get rid of traditional Medicare.
Medicare Advantage plans seem like a big racket. They advertise like crazy during enrollment time but they even do it year round, as I recently found out because I was sick and watched some daytime TV and the MA commercials were relentless. I don’t understand how Medicare Advantage is legal. It just seems to just siphon money from Medicare and offer poorer coverage. And if they’re advertising all the time they certainly have money to burn. That money isn’t going to patients from what I can tell.
I recently helped an older person who needed to go to skilled nursing for rehab coming out of the hospital. They had a Medicare Advantage plan. OMG, it was a nightmare. The insurance company doesn’t work weekends so the patient couldn’t get approved to go to SNF. The medical staff at the hospital was incredibly frustrated by this issue but said it happens all the time. They can’t get patients out so they can’t get them in. I was told many times if the patient had traditional Medicare they would have been approved for the SNF immediately.
If you’ve already done a post on this, my apologies. If not, I’d be interested in any thoughts you might have. Thanks.
raven
@Yarrow:
Clark Howard
Tony G
However: According to “fiscal conservatives”, people should just die if they get sick or injured and can’t pay for medical care out of pocket.
raven
@Yarrow:
frosty
@raven: Our decision was made easier once we finally settled the question of whether an Advantage plan in one state would cover our doctors in another state. Nope. What about out of network coverage? No clear answer. So nope to any Advantage plans. Just a PPO by another name.
Good choice too, since both of us have needed ER or Urgent Care on our travels and Medicare + Medigap coverage was simple and painless.
RevRick
From 2002 to 2020, the church I served held an annual fundraiser to assist families struggling financially due to medical conditions in the family. We began with a couple who belonged to the church, whose health insurance didn’t cover all the expenses they incurred, and raised $8400 for them. The next year, we did so for a couple in the community, and over the course of all those years assisted 61 families, raising over $1 million on their behalf.
We found that in a number of cases, the families went to great lengths to pay off their medical debts by paying for it with credit cards and home equity loans. This was often coupled with huge losses in income, either directly for a former earner or indirectly due to caregiving demands.
Most of the families we helped were dealing with chronic health conditions.
Yarrow
@raven: Unfortunately a lot of companies that offer health insurance as a retiree benefit are switching what they offer to a Medicare Advantage plan. So those retirees don’t have a choice unless they want to go on the open market.
In the case of two people I know the retiree MA plan is probably better than what they can get on the open market for most things and they also get dental and vision coverage, which is definitely better than what they can get on the open market at a similar cost. So it’s a tough choice.
It seems like a complete racket and I think it shouldn’t be allowed. Especially the no switching back thing. That’s not okay.
stinger
Thank you for helping to keep these “obvious” facts in the public eye, David.
Yarrow, I’m sure David will know more than I, but as a person now on Medicare, I can say that Med Advantage plans don’t replace Medicare, they supplement it. There are other supplemental plans, known broadly as Medigap plans, and it seems that the employers in question are proposing to replace their Medigap offerings with Medicare Advantage. This won’t affect retirees’ Medicare coverage, just the supplemental aspects — covering (or not) copays, requiring (or not) advance approval of medical treatments, limiting (or not) the providers to a certain restricted list, etc.
I have a Medigap plan. I recently had a substantial medical issue that entailed many diagnostic procedures, outpatient surgery, and postsurgical treatments. I’ve been able to sit back and basically just watch as hospital and provider statements come in, and see how Medicare pays for most of it and my Medigap plan pays for the rest. All the rest. I’ve paid nothing! (Except Medicare and “Medigap” premiums.) As far as I know, no treatment was denied or delayed because of the insurance plan.
I get the feeling that Medicare Advantage is mostly an advantage to the insurer. Must be an advantage to the employer as well. Maybe it’s preferable to a Medigap plan for some people, in some ways. I look forward to seeing what David may have to say about this, and other current retirees as well.
ETA: And now, reading through other comments, I see I may be wrong about MA. But I don’t see how it can REPLACE Medicare for people who signed up for Medicare upon turning 65.
Yarrow
@stinger:
Previously the person I was speaking of in my original comment had Medicare plus supplemental (medigap) insurance, the latter of which was a retirement benefit. At doctors’ offices they’d present both their Medicare card and their supplemental card. Now, they have one insurance card, the Medicare Advantage card. The Medicare card is no longer used.
Medicare Advantage is not a supplement in that traditional sense. It replaces traditional Medicare although it has to cover some of the same services, but not all. Some things that wouldn’t need prior authorization under Medicare now need it under the MA plan. It operates like an HMO or PPO in that sense. It says right on the card, “[health insurance company] Medicare PPO.” I know for sure that this person used to be able to get a procedure done without prior authorization. Now it requires prior authorization every six months. It’s an absolute pain.
patrick II
I will always remember Al Franken questioning an insurance executive during the ACA hearings.
Franken: Do you know how many bankruptcies there were in Germany last year due to medical expenses?
Insurance executive (searching his memory for a moment) Uh…no.
Franken: Zero.
Ohio Mom
When Ohio Dad and I were approaching Medicare age we went with Traditional Medicare because of issues with Gap plans — if you are on an Advantage plan and then acquire some weird medical condition and want to see a specialist that isn’t in your network, and think, “What the hell, I’ll just drop the Advantage plan and go on Traditional Medicare,” you may not be able to find a Gap plan that will accept you with your new, but now pre-existing, medical condition. Or you find a plan but your premiums are unaffordable.
You need the Gap plan because Traditional Medicare only pays 80%. Sure, if you go to a doctor and it’s $200, you might shrug your shoulders and say, “Eh, it’s only $40 out of my pocket,” but when it’s 20% of the gazillions your open heart surgery cost.. That’s the”gap” the Gap plans cover, that 20% of a gazillion.
It’s a hassle, wading through the fine print from the Gap plans to find the one you think is the best deal. And then you have to do the same for a Part D (drug) plan, but at least there’s a computer site to help you with that — you type in your zip code and the meds you take regularly and the site tells you which plan at which local drug store will cost how much.
Oh, so you went Traditional Medicare from the start, got the same new weird medical condition your friend in the Advantage plan got and your new specialist wants you to take an expensive med that you hadn’t typed in when you were at that site — well, that’s something I haven’t found out yet and I fit think I’ll like it if/when I do. But since you have to sign up for your Part D plan every year, you’ll have an opportunity to switch.
Mai Naem mobileI
The Medicare/MA issue works the way, healthcare works most of the time in this country. MA can be good if you’re healthy and don’t use much healthcare. If you’ve got enough money to afford traditional Medicare with the supplement then it’s the way to go but you’ll pay for dental OOP and regular vision(regular eye exams,eye wear) OOP. Medicare will give you more freedom to go where you want. The annual deductible IIRC is ~ $200. With MA you don’t get the Medicare supplement premium but you get a network with prior auths on almost everything. Out of network you pay OOP. But you have a vision benefit and a dental benefit. Pick your poison.
Ohio Mom
My impression is, you either pay more money in front with Traditional Medicare, or pay later in lots of ways with an Advantage Plan. The friends I have who have limited financial means all went Advantage because that’s what they could afford on their budgets. I think of this as yet another example of the old adage, The poor pay more.
When I see how much Advantage plans are skimming off from our taxes, I feel patriotic having gone Traditional.
People who are young and don’t know enough think Medicare is a version of socialized medicine. That’s traditional MedicAID, MediCARE is a partially privatized mess.
StringOnAStick
@Yarrow: Medicare Advantage gets people to sign up because it is cheaper on a monthly basis, but can bite you hard in the future should you have major medical expenses that it pays just 80% of.
You get a “free look” period of 12 months on Medicare Advantage, during which you can switch back to “regular” Medicare without your pre-existing conditions legally being used to increase your Medicare premiums in accordance to the higher costs expected because of your (likely new) pre-existing issues. My husband and I were advised to do the cheaper Medicare Advantage for that year, then switch.
I have been trying to get a new primary care doctor, and having bad luck especially because of being on MA. The highly recommended PA’s we were directed towards have taken their limit of MA patients, but would take us if we were on regular Medicare.
MA has dental and vision, plus free gym memberships, but when the medical shit hits the fan, MA is going to pay far, far less of your expenses than regular Medicare. Our monthly co-pays for drug plans, supplementals, etc are higher than what we paid for ACA plans that were 100% subsidy paid, by about $100/month. Given that my husband has a form of chronic leukemia that may or may not need treatment at some point, he will be going on traditional Medicare once his “free look” period is up, and I will be doing the same. I am eternally grateful that we can afford to do so, and embarassed that I live in what is supposedly the world’s richest country and we treat our citizens in such a shitty fashion when it comes to health care.
Ohio Mom
@JeanneT: It’s going to cost but I reccomend consulting with an Elder Care attorney. There may be a way to shelter some of that income and get your MIL under the cut-off point.
As most commentators know, our adult son has autism and is on SSDI and a Medicaid Waiver, and we wouldn’t have been able to set all that up without the Elder Care attorney — we had to set up a trust and some other odds and ends.
JeanneT
@Ohio Mom:
I think I’ll be taking this advice. Definitely worth exploring if there’s a way to shelter the income.
Ohio Mom
@JeanneT: There may not be a way to shelter the money. But the lawyer will tell you that right off the bat. The lawyer will also ask if MIL has a will, a living will, DNR (if she wants one), and that she has given someone(s) Power of Attorney for medical and financial. Having all that in order will prevent problems later.
JaneE
I have had Kaiser Permanente coverage since 1979. When my husband retired, his company offered a medical benefit for retirees (still does, more later). The options were modified versions of what the employee coverage was because the options were presumed to coordinate with Medicare and would subordinate their benefits. We took the Kaiser coverage because we already had a long history with them, liked our primary doctor and had a relatively convenient network for specialists. Even before the ACA passed, the Kaiser option had become the cheapest option, the one I remember was about a third of the see anyone type of coverage. The last few years they have not even offered us an option of switching to another plan, we either keep our Kaiser coverage or drop the benefit entirely. That may be an indicator they only use Medicare Advantage type of coverage, or they may have not had many retirees picking the more expensive option.
The coverage has its own plan number that indicates our benefit schedule – it is somewhere between the standard employee coverage and the standard Medicare advantage rates. Our co-pays tend to be less, but hospitalization is more.
FWIW, we have only needed one out-of-area benefit so far, a trip to the emergency room after a fall. When the hospital cashier asked about our insurance, I pulled out my Kaiser card and her face brightened. She said they never have trouble billing Kaiser and always get paid promptly. I gave her the co-pay and that was that. It was a few months before I saw the bill, and everything I got said I did not need to pay them any more money, even though what was billed and what was paid was quite a bit apart. I don’t know if it was because we were relatively close to a Kaiser coverage area but not in one, or if they are just good about paying out of area benefits.
stinger
@Yarrow: I’m learning a lot from these comments! My financial advisor is also licensed to advise on health insurance, and some of the details she doubtless explained to me 5 years ago I’ve since forgotten and am being reminded of here.
I had every reason to believe I’d be as healthy in retirement as I was while working, and then, BOOM — cancer. I’m so glad I went with a Medigap plan. I think the premiums are higher, as people are saying, and have to get dental and vision separately, but I’m buying ease of getting medical care and peace of mind.
Yarrow
@stinger: It certainly seems like a discussion people are interested in having. I’m learning a lot too.
Anecdotally, it seems that companies are only offering Medicare Advantage plans if they offer health benefits as part of a retiree benefit. I suspect it’s cheaper for the companies. The retirees don’t get a choice to keep retiree benefits AND go with traditional Medicare. That sucks.
David, I’d really be interested in any thoughts you might have on this issue. There’s great info here but you’re a professional and might have different info.
It’s so incredibly frustrating that older Americans have to go choose health coverage. Who helps them navigate it if they need help and don’t have adult kids or other family who can help? What an awful, awful system.
stinger
@Yarrow:
Agree 100%.