Study: Societal savings from fewer missed housing payments offset some ACA costs
6/16/2017

Near-poor households that enroll in subsidized Marketplace insurance
are 41 percentage points less likely to become delinquent on home
payments compared to similar uninsured households.

Low-income people who gain health insurance are much more likely to make their rent and mortgage payments, according to a new Washington University study of families living near the poverty line.

Researchers found that near-poor households that enroll in subsidized Marketplace insurance are 41 percentage points less likely to become delinquent on home payments compared to similar uninsured households. As a likely consequence, the rate of home delinquency for households without access to employer insurance fell by 31 percent at the income eligibility threshold to receive Marketplace subsidies during the 2015-2016 period.

The study, performed at the Center for Social Development at the Brown School of Social Work and the Olin Business School, is one of the first to show the effect of the Affordable Care Act on family finances and the first to show the financial impact of the Marketplace component of the program, in particular.

“Our results indicate that lower home payment delinquency may be an important benefit from subsidized Marketplace insurance,” the authors write.

Lower delinquencies mean fewer foreclosures and evictions. 

“The spin-off benefits to the community may offset a substantial share of the cost of the subsidy program,” said lead researcher Emily Gallagher. “Not only do the banks and landlords benefit, but the entire community gains through lower rates of homelessness and abandoned property. There are fewer vacant homes dragging down housing values in the neighborhood.”

Co-author Michal Grinstein-Weiss, a professor at the Brown School, said: “The main benefit, of course, goes to parents and children who get to keep their homes after being hit with a big medical bill. They also get the medical care they need.”

The study shows that, under plausible scenarios, the societal cost savings generated from fewer evictions and foreclosures could equal half of the cost of subsidizing coverage for the near-poor.

Researchers used anonymous tax and survey data on nearly 5,000 families. Washington University uses the anonymized data of a sample of consenting free-file participants in order to advance the understanding of family economics.

The study compared near-poor families who qualified for heavily subsidized coverage under the ACA’s healthcare Marketplaces with similar families that just barely did not qualify. 

“States’ differing approach to the ACA – some expanded Medicaid coverage while others didn’t – set up a ‘natural experiment’ allowing the comparison,” Gallagher said.

Radhakrishnan Gopalan, finance professor at the Olin Business School, co-authored the study. The study is available at https://ssrn.com/abstract=2922260.