WI23-06: Does Health Insurance Reduce Consumption Risk?

We investigate the impact of health insurance on consumption by leveraging the variation arising from state-level decisions regarding Medicaid expansion in 2014. The efect of health insurance on consumption is ex-ante ambiguous due to the presence of unpaid medical debt and option to receive charity care directly from healthcare providers. Using a combination of diference-in-diferences and changes-in-changes specifcations, our study fnds that there is no statistically signifcant efect of this health insurance expansion on consumption, even at the lower end of the consumption distribution. This research contributes to the existing knowledge on the insurance value of Medicaid expansion.