The Effect of Health Insurance on Savings Outcomes in Individual Development Accounts

This practicum explores the role of health insurance coverage for Individual Development Account (IDA) participants. Health insurance operates as a significant mediator for savings and asset accumulation, increasing the likelihood of success by 10% to 20% depending on the savings outcome and altering the likelihood of success by 26% to 75% depending on the outcome for certain participant sub-groups. Specifically, participants with health insurance are more likely to be savers (save $100 or more); make higher average monthly net deposits and cumulative deposits throughout program participation; are less likely to drop out of the IDA program prior to making a matched withdrawal; and more likely to make an asset purchase with their IDA savings and matching funds. In addition, medical debt is a savings barrier for IDA participants and has a statistically significant detrimental effect on each of six IDA savings outcomes, decreasing the likelihood of success by 11% to 34% depending on the outcome. Both IDA program administrators and policymakers can use these findings to improve and expand upon the current IDA policy model and ensure participant success.