Medicaid Expansion Significantly Decreases Financial Hardship and Improves Mental Health

May 20, 2013

By Elizabeth Lower-Basch and Lavanya Mohan

new study published in the New England Journal of Medicine examining the impact of expanded Medicaid coverage has gained national attention. The study collected data on Oregon residents who received insurance through the state's expanded health care program. Although 90,000 low-income people qualified and applied for the program, only 10,000 ultimately received coverage. Unlike previous studies, this allowed researchers to test the impact of Medicaid expansion by comparing health and other outcomes between those who received coverage and those who did not.  

One of the key conclusions drawn by the study is that health care coverage nearly eliminated out-of-pocket medical expenses, especially catastrophic expenditures, for the program's 10,000 participants. As the study's lead researcher stated, Medicaid coverage generated "enormous reductions in financial strain and hardship," preventing participants from having to face mounting medical costs and/or debt, while also reducing other forms of financial strain such as borrowing money or delaying other bill payments.

This is good news for poor families who have a hard time making ends meet. Without health care coverage, they must often choose between paying medical bills or other basic necessities.  Expanded Medicaid coverage can eliminate that stress, allowing low-income families to pay for things like rent, food, and childcare without racking up debt.

In addition to improved financial security, the study also shows the impact of Medicaid expansion on health conditions. Mental health indicators improved significantly, with depression rates among recipients falling by 30 percent. Additionally, Medicaid recipients sought and received more preventative care. However, while physical health indicators (such as blood pressure, cholesterol, and diabetes) did improve, those gains weren’t statistically significant.

Some opponents of Medicaid expansion are arguing that because the study didn’t show major improvements in physical health, the program hasn’t benefited participants’ overall wellbeing. This ignores the strong evidence for improved mental health and reduced financial stress.  As stated, physical health indicators among the 10,000 Medicaid recipients did improve - a larger sample size may have shown more statistically significant gains. Additionally, the two-year time period of the study may not have been long enough to measure the full impact of preventative care services.

Despite what opponents of Medicaid expansion are saying, the study does show significant improvements in mental health and financial security. As more states make decisions on whether to expand Medicaid coverage, CLASP urges governors and state legislatures to consider the benefits identified in this study.

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