Laura M. Argys, Andrew I. Friedson,
M. Melinda Pitts, and D. Sebastian Tello-Trillo

Working Paper 2017-6a
August 2017 (revised October 2019)

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A primary goal of health insurance is smoothing the financial risk associated with health shocks. We estimate the effect of exposure to health-insurance reform on individual-level financial well-being. Using a plausibly exogenous shock to health insurance status resulting from a sudden disenrollment from Tennessee's Medicaid program in 2005, we find that the reform resulted in a 2.78 point decline in credit risk score for an individual in the median county in Tennessee. This study is the first examining the impact of losing any form of public assistance on personal financial well-being, and our results inform ongoing discussions around Medicaid reform.

JEL classification: D14, H75, I13

Key words: Medicaid, public assistance, household finance, debt, bankruptcy

The authors are grateful for suggestions from David Altig, Charles Courtemanche, Emily Gallagher, Anthony Lo Sasso, Vinish Shrestha, Nicholas Sly, and seminar participants at the Southern Economic Association Meetings, Eastern Economic Meetings, AHRQ, the University of Colorado, the University of Virginia, the University of Tennessee Knoxville, Georgia State University, Annual Health Economic Conference, the Southeastern Health Economics Study Group, Utah State University Economics Seminar, UVA Economics Junior workshop, and the Federal Reserve Bank of Atlanta. The views expressed here are the authors' and not necessarily those of the Federal Reserve Bank of Atlanta or the Federal Reserve System. Any remaining errors are the authors' responsibility.
Please address questions regarding content to Laura M. Argys, Department of Economics, CB 181, University of Colorado Denver, P.O. Box 173364, Denver, CO 80217-3364,; Andrew I. Friedson, Department of Economics, CB 181, University of Colorado Denver, P.O. Box 173364, Denver, CO 80217-3364,; M. Melinda Pitts, Federal Reserve Bank of Atlanta, Research Department, 1000 Peachtree Street NE, Atlanta, GA 30309-4470, 404-498-7009,; or D. Sebastian Tello-Trillo, 235 McCormick Road, Garrett Hall L031, University of Virginia, Charlottesville, VA 22904,
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