Medicaid expansion helped enrollees’ long-term financial health, study finds

Twelve years ago this spring, the first Michiganders began getting their health care coverage from the Medicaid expansion program known as the Healthy Michigan Plan. 

Today, more than 650,000 are enrolled in the program, which provides health care to individuals with low incomes. Multiple studies have already shown the program is linked to better physical and mental health, and ability to work or seek a job. 

Now, a new University of Michigan study shows that enrolling also had a positive and long-lasting impact on the financial health of its first enrollees.

Over time, the study shows, those who enrolled in the first four years saw large drops in their amount of medical debt in collections – as much as 75% from the peak. That means they had fewer medical bills that were left unpaid for so long that they were turned over to a collection agency. 

Medical debt kept declining for at least seven years after enrollment, according to the findings published in the journal JAMA Network Open.

Having medical bills sent to collections can lower someone’s credit score, which can make it more difficult for them to get a loan. It can also lead them to avoid needed medical care in the future.

The study also finds that the credit scores of Medicaid expansion enrollees improved, with substantial drops in the numbers who scored below 600, a number considered sub-prime or risky for lenders. The drop in rates of subprime scores was between 30% and 50% relative to the rates at the start of enrollment.

The new findings have importance for states as they implement new Medicaid requirements and funding limits signed into federal law last year. The findings can also inform policymakers and voters in the 10 states that have still not expanded Medicaid, and several states that expanded it in the past few years. 

“As Medicaid changes and enrollees face new requirements for new or continued access to coverage, these findings can help to give a fuller picture of the financial benefits of these programs,” said Nora Becker, M.D., Ph.D., the U-M primary care physician and health economist who led the study. “We know that financial stress from medical debt is closely intertwined with physical and mental health, including decisions to go without health care to avoid more potential costs. People with more financial security also earn higher incomes and pay more taxes in the future, so Medicaid expansion may also have benefits for state and local government budgets as well. This is why it’s important to look at personal financial factors over time to give a full picture of Medicaid expansion’s impacts.”

Read the IHPI policy brief

Becker is part of a team from the U-M Institute for Healthcare Policy and Innovation that conducted the official evaluation of the Healthy Michigan Plan through a partnership with the Michigan Department of Health and Human Services. The evaluation was required under the state’s waiver with the Centers for Medicare and Medicaid Services that spanned the period 2019-2023, and data from the evaluation were used in the new study. 

John Z. Ayanian, M.D., M.P.P., the leader of the evaluation and IHPI’s director, is the new study’s senior author.

Other financial impacts

The study looks at four kinds of financial outcomes, using anonymous data from Healthy Michigan Plan enrollees and from a major credit agency.  

It focused on adults ages 26 to 62 – the years when someone can’t be covered by a parent or guardian’s insurance, and can’t receive Social Security retirement benefits or be eligible for Medicare. 

To get the long-term view, the team concentrated on those who enrolled in the Healthy Michigan Plan in its first four calendar years of operation, from 2014 to 2017, and were still alive for at least three years after enrolling. In all, data on 575,283 individuals was analyzed, nearly half of whom enrolled in the program’s first year.

The researchers looked at anonymous financial information for each person, starting several years before their enrollment and for up to seven years after enrollment.

The drop in medical debt in collections really began to be seen in the third year after enrollment, and accelerated after that. Subprime credit score rates began to drop even after the first year of enrollment.

Ayanian notes that these effects may be tied to another effect already documented by previous IHPI research. On the whole, he and his colleagues showed earlier, Healthy Michigan Plan enrollees reported that the coverage increased their ability to work or seek work. Half of enrollees are employed but have incomes low enough to qualify for Medicaid coverage
However, two other financial indicators did not change after enrollment: rates of non-medical debt in collections and bankruptcy rates.

Data collection was funded by MDHHS and CMS for the purposes of the evaluation but the new paper does not represent the official views of either agency.

In addition to Becker and Ayanian, the study’s authors are Helen Levy, Ph.D., Richard A. Hirth, Ph.D., Sarah J. Clark, M.P.H. and Renuka Tipirneni, M.D., M.Sc.  Becker, Ayanian and Tipirneni are faculty in the Division of General Medicine in the U-M Medical School’s Department of Internal Medicine, and Clark is faculty in the Medical School’s Department of Pediatrics. Levy is a faculty member in the U-M Institute for Social Research, and Hirth in the U-M School of Public Health, where Levy and Ayanian have joint appointments. Levy and Ayanian have joint appointments in the Ford School of Public Policy. All authors are members of the U-M Institute for Healthcare Policy and Innovation.

Learn more about the IHPI evaluation of the Healthy Michigan Plan here: https://ihpi.umich.edu/featured-work/healthy-michigan-plan-evaluation 

See summaries of past research showing links between Healthy Michigan Plan enrollment and impacts on health and work here: https://ihpi.umich.edu/featured-work/healthy-michigan-plan-evaluation/news  

Financial Outcomes Among Medicaid Expansion Enrollees, Nora V. Becker, MD, PhD; Helen Levy, PhD; Richard A. Hirth, PhD; Sarah J. Clark, MPH; Renuka Tipirneni, MD, MSc; John Z. Ayanian, MD, MPP, JAMA Network Open, doi:10.1001/jamanetworkopen.2026.9328