Medical debt has been almost halved within the states that expanded Medicaid

Medicaid’s expansion not only offers more health insurance for people – it appears to cut medical debt tremendously, a new study found.

The Affordable Care Act offered states a huge infusion of federal funds to extend Medicaid entitlement to low-income adults, and about 30 states immediately adopted that agreement in 2014. Since then, new medical debt has fallen 44 percent in these states, a dramatically more dramatic decrease than in states that refused to expand the program over the same period. These states only showed a 10 percent decrease.

The study was published in JAMA by scientists from Harvard, Stanford, UCLA, and the National Bureau of Economic Research. The researchers found that over the periods they examined, 2009-2020, non-medical debt fell by similar amounts in the expanding and non-expanding states, adding to the argument that Medicaid expansion was the difference to medical debt.

Medical debt isn’t just bad for people’s finances or their creditworthiness. It’s bad for your health. The researchers found that high medical debt is associated with lower health care utilization, and in general, people with more debt report poorer mental health.

“That’s a really big effect,” said Raymond Kluender, one of the authors and assistant professor at Harvard Business School, in an email. “The Medicaid expansion was well-targeted to a population that was extremely vulnerable to medical bills and lacked access to affordable health insurance (and in states that haven’t expanded).

The states that expanded Medicaid in the years after 2014 saw a significant but smaller decrease in medical debt than states that expanded in the first year.


In states that expanded Medicaid, both the low-income and high-income groups decreased their medical debts after the expansion, but the amount of medical debt that was added each year decreased much more for the former (by $ 180, from $ 458 to $ 278 ) than for the latter (around $ 35, from $ 95 to $ 60).

In the non-expanding countries, on the other hand, the lowest-income group saw an average increase in new medical debt of $ 206, from $ 630 to $ 836. However, the highest income group still saw a slight decline in new medical borrowing.

“Many of the states with the highest medical debts before the ACA did not expand Medicaid and have not experienced any significant reductions in medical debt afterwards,” the researchers summarized their results.

These states are concentrated in the south. Eight of the 12 non-developing countries are in the region. Almost one in four southerners has some medical debt on their credit report, compared to 10.8 percent of people in the Northeast and 12.7 percent in the West.

This dramatic decrease in medical debt following the expansion of Medicaid can be added to the body of evidence documenting the benefits of the program. Research shows that after Medicaid’s expansion, people will have more access to health care and better self-reporting about their health. Cancer diagnoses come earlier and patients are more likely to receive the prescriptions for the drugs they need. A 2019 National Bureau of Economic Research working paper concluded that states’ refusal to expand Medicaid had resulted in more than 15,000 deaths in one year that otherwise would not have occurred.

And, as health economists Jonathan Gruber and Benjamin Sommers wrote in the New England Journal of Medicine last year, states have been able to implement the expansion without any negative impact on their finances. The expansion of Medicaid allowed them to cut other expenses – on free care, looking after those in the judicial system, etc. – while the expansion was fully subsidized by federal agencies.

The Democrats in Congress are working on a proposal to insure the 4 million uninsured people in non-enlargement states who would be insured through the Medicaid expansion. They want to include such a provision in their budget reconciliation draft this year. A new expansion incentive decided as part of the American rescue plan has so far not led most of the non-enlargement states to reconsider their position.

Overall, the upturn in the economy from 2009 to 2020 led to a decline in all types of debt. However, because medical debt has declined less than non-medical debt, the US has more of the former than the latter, according to a new JAMA analysis of a nationwide representative sample of anonymized credit reports.


The total medical debt identified in TransUnion’s research-verified credit reports would be $ 140 billion nationwide. An estimated 18 percent of Americans have medical debt on file. However, there may also be additional debts that are not listed in the credit reports – for example, for medical services that are paid for by credit card.

Still, research is a good starting point for understanding the scale of the medical debt problem in the United States – and the difference Medicaid’s expansion can make.

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