Working Paper

Financial Consequences of Health Insurance: Evidence from the ACA’s Dependent Coverage Mandate


Abstract: We study the financial effects of health insurance for young adults using the Affordable Care Act’s dependent coverage mandate as a source of exogenous variation. Using nationally repre-sentative, anonymized credit report and publicly available survey data on medical expenditures, we exploit the mandate’s implementation in 2010 and its automatic disenrollment mechanism at age 26. Our estimates show that increasing access to health insurance lowered young adults’ out-of-pocket medical expenditures, debt in third-party collections, and the probability of per-sonal bankruptcy. However, most improvements in financial outcomes are transitory, as they diminish after an individual ages out of the mandate at age 26.

Keywords: health insurance; consumer credit; financial outcomes; Affordable Care Act;

JEL Classification: D14; I13; I18;

https://doi.org/10.21799/frbp.wp.2019.54

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Provider: Federal Reserve Bank of Philadelphia

Part of Series: Working Papers

Publication Date: 2019-12-17

Number: 19-54