Title

Public Health Insurance and Access to Credit

Author(s)

Claire Célérier Claire Célérier (University of Toronto)

Adrien Matray Adrien Matray (Princeton University)

Abstract

In this paper, we exploit household level data over the 1984-2014 period to estimate the effect of publicly-provided health insurance on household overall financial situation. By using staggered expansions of Medicaid across states, we find that eligible households face lower out-of-pocket medical expenses, fail less to pay for basic expenses such as housing and food, and default less on their mortgages. We then look at the effect on household access to mortgage. Eligible household are more likely to hold mortgage debt, which translate into higher home equity, and wealth. Using mortgage application data to tease out demand and supply, we find that application are less likely to be denied when Medicaid coverage is extended. Lenders are therefore responding to the decline in financial risk due to lower out-of-pocket medical expenses. Overall, access to health insurance improves household financial situation.

Creation Date

2017-07

Section URL ID

Paper Number

2017-3

URL

https://www.dropbox.com/s/1ngr8cnpe4ftk5b/medicare_credit_July2017_v3.pdf?dl=0

File Function

Jel

H51, I13, I38

Keyword(s)

Household Finance

Suppress

false

Series

13