WI23-06: Does Health Insurance Reduce Consumption Risk?

We will study the effect of health insurance on economic security, with economic security conceptualized as the ability to maintain consumption standards in the face of economic shocks. While recent literature establishes that health insurance access improves financial outcomes such as medical debt and bankruptcy, it remains open question how insurance affects consumption risk itself. To study this question, we will use detailed, household-level grocery expenditure data to measure consumption risk and its response to health insurance. Examining the effect of health insurance properly requires variation, which we will obtain from the timing of Medicaid expansion in the Patient Protection and Affordable Care Act. The expansion was implemented in some states but not others, allowing us to estimate difference-in-differences models. We will investigate overall effects of the insurance expansion, along with differences along other dimensions of interest such as race/ethnicity, to better examine policy disparities. The findings will provide direct evidence on the economic security of low-income individuals in the United States, many of whom are beneficiaries of the Social Security Administration. As enrollment in Medicaid among those who are eligible remains far from 100%, the findings will also speak to whether encouraging enrollment can increase economic security in vulnerable populations.