Alleviating the Financial Burden of Poverty with Medicaid

By Joseph Benitez, PHD, MPH
August 16, 2022

This week’s contributor, Joseph Benitez, is an Assistant Professor of health management and policy at the University of Kentucky College of Public Health. His research interests include the impacts of public policy changes on the medically underserved, Medicaid policy and the role of Medicaid as a safety net program. Joseph is a member of the 2022 Tradeoffs Research Council. 

Medicaid has improved access to health care, but it also may work as an anti-poverty program more generally. By making health care more affordable for low-income families, it may free up resources to pay for other expenses. This may be particularly helpful for people with costly medical conditions who may face housing instability, food insecurity or financial distress

A recent study in Health Affairs by Hannah Shadowen and colleagues studied changes in measures of financial security among people who benefited from Virginia’s Medicaid expansion. The researchers compared responses to surveys and interviews before and after the 2019 expansion from people continuously enrolled for at least 12 months. 

The researchers found that:

  • After they got Medicaid coverage, people reported having fewer incidences of financial distress including lower health care costs (e.g., catastrophic health care expenses, difficulty paying medical bills) and fewer concerns about non-health care expenses (e.g., worried about housing costs, able to buy food, monthly bills). 
  • The reductions in measures of financial distress were generally larger for non-Hispanic Black people compared with non-Hispanic white people and for rural compared with urban residents. 
  • The improvements in financial measures persisted through the COVID-19 pandemic. 

While the authors’ findings are just for Virginia, they are consistent with (and even more pronounced) than a similar Medicaid beneficiary study in Ohio, which expanded Medicaid in 2014. Differences in pent-up medical needs across the groups as well as between Virginia and Ohio could explain why some groups in Virginia experienced larger reductions in financial distress than people in Ohio. 

Differences in the Medicaid program between the states could be another factor, including higher payments to providers in Virginia’s Medicaid program. While we know fees are generally associated with greater Medicaid acceptability among physicians, we know little as to whether the benefits of improved fees extend to non-health care outcomes such as protections from financial distress. This research suggests increasing how much Medicaid pays providers could improve beneficiaries’ access to health care and reduce their financial burdens.

These findings are especially relevant as the end of the COVID-19 public health emergency could push millions off of Medicaid. And despite some efforts to include the policy in the Inflation Reduction Act passed by Congress last week, Democrats failed to close the so-called Medicaid coverage gap, which would allow around 2 million people in mostly southern states to access Medicaid. Medicaid’s potential to protect against poverty as well as ill health should be top of mind for policymakers.

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