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Massachusetts health care — wonky, with a healthy dose of reality

Study Shows Mass Health Reform Improved Economy, Too

Study Shows Mass Health Reform Improved Economy, Too

August 1, 2016

The purpose of health insurance is twofold. First and foremost, it serves to protect a person’s health. Without coverage, people are more likely to delay getting needed care. But, almost as importantly, coverage ensures financial security. Even a routine procedure like an appendectomy could mean financial ruin for the uninsured. An important new study, The Effects of the Massachusetts Health Reform on Household Financial Distress, published in the American Economic Journal, sheds light on the economic impacts of the 2006 Massachusetts health reform. The conclusions suggest that the effects of sweeping health reform extend far beyond better health outcomes; expanding coverage may actually help to lift people out of the hole financially, ultimately driving opportunity for economic growth.

The study compared financial characteristics of people under age 65 in Massachusetts to other New England states, before and after full implementation of the Massachusetts health care law in 2008. The model took into account which subgroups were most heavily affected by the reform. Before the reform, from 1999-2005, Massachusetts followed the same financial trends as other New England states. After the expansion of coverage in 2008, Massachusetts suddenly deviated. The authors concluded that higher coverage rates directly and significantly contributed to the following outcomes through 2012:

  • improved credit scores,
  • reduced total debt,
  • reduced total amount and percent of debt past due, and
  • reduced probability of personal bankruptcy.

Just to be sure about health reform’s causal effect on improved financial well-being, the authors conducted an analysis of individuals over age 65 in Massachusetts, since this age group was essentially unaffected by the reform. Confirming the findings, seniors’ financial outcomes did not change relative to those who gained access to insurance under the reform.

The authors conclude:

Our analysis shows that health care legislation has implications that reach beyond health care providers and the uninsured, and extend into credit markets, benefiting not only uninsured households who gained coverage, but also creditors who served these households. Our finding that credit scores improved as a result of the reform indicate that the reform increased future access to credit for those individuals who gained coverage. These results show that health care reform legislation has pervasive effects not just on health and the use of health services, but across many measures of household well-being.


Chart adapted from paper, showing decline in Mass residents with over $10,000 in debts.

Particularly striking is the fact that these financial improvements took place in the midst of a serious economic recession. It prompts the question: did the 2006 health reform help mitigate some of the recession’s worst effects for the state of Massachusetts? Common sense economics says that if people have less bad debt, less likelihood of declaring bankruptcy, and better credit, they will have better economic opportunities. Greater numbers of economically healthy individuals means a more prosperous economy as a whole. A higher credit rating means better prospects of home ownership. Less unpaid debt means more money flowing through various sectors of the economy. Less personal bankruptcy means – well, let’s just say we know what happened in the 2008 financial collapse.

Again, Massachusetts leads the way in demonstrating the far-reaching beneficial impacts of universal healthcare. The nation should take note.

                                                                                                                                                                         -- Mike DiBello