Karen Bouffard

The Detroit News

Enrollment in Michigan's expanded Medicaid program boosted the finances of many low-income residents as well as their health care status, according to a University of Michigan study released Monday.

Among more than 655,000 residents who gained health coverage after the Legislature approved the Healthy Michigan Plan in April 2014, many have experienced fewer debt problems and other financial issues than before enrollment, according to the analysis of thousands of enrollees' financial records.

The study found drops in unpaid debts, such as medical bills and overdrawn credit cards, as well as fewer bankruptcies and evictions after people enrolled in Healthy Michigan. The program provides health insurance for adults with incomes up to 133 percent of the federal poverty level.

The research team was led by economist Sarah Miller of UM’s Ross School of Business. Their finding were published Monday on the website of the National Bureau of Economic Research with colleagues from the Federal Reserve Bank of Chicago, University of Illinois, Chicago and Northwestern University.

The greatest financial gains were experienced by people with chronic illnesses or who had a hospital stay or emergency department visit after they enrolled.

“Across the board, we saw a pretty sizable effect, not just on unpaid medical bills, but also unpaid credit card bills, and on public records for evictions, bankruptcies, wage garnishments and other actions,” said Miller, a member of the UM Institute for Healthcare Policy and Innovation.

“Enrollees’ financial well-being seems to improve when they can get the medical care they need without having to put it on a credit card. And the largest effects are among the sickest enrollees.”

The team worked with the Michigan Department of Health and Human Services to obtain data on more than 322,000 enrollees without the researchers’ having access to any individual’s identifying information. Using a double-blind matching procedure, they matched the data with enrollees’ credit reports, and studied them as a group.

The study focused on people who enrolled during the first year of the Healthy Michigan plan, and who had previously been uninsured. Researchers looked at individual-level financial information from several years before each person enrolled, and for at least one year following enrollment.

The average household income for enrollees in the study was $4,400 for an individual and $7,500 for a family of three. Seventy percent had a chronic illness, and on average they had been to an emergency department once in the past year.

“A goal of the Healthy Michigan Plan is to address social determinants of health in order to promote positive health outcomes, greater independence and improved quality of life," said Lynn Sutfin, a spokeswoman for the Michigan Department of Health and Human Services.

"This study shows that ensuring Michigan residents have access to quality, affordable health care is reaping numerous benefits.”

More than 80 percent had credit scores in the subprime or deep subprime range. Their total debt in collections, medical debt in collections and past-due amount was higher than a random sample of credit reports nationally.

According to the study's findings, the Healthy Michigan Plan reduced their medical bills in collections by an average of 57 percent, or about $515. The amount of past due debt not yet sent to a collection agency was reduced by 28 percent or about $233.

Researchers found a 16 percent drop in public records for evictions, bankruptcies, wage garnishments and other financial events. Bankruptcies dropped by 10 percent among the group studied.

Enrollees’ were 16 percent less likely to overdraw their credit cards, and their credit scores improved as a group. The number with a “deep subprime” rating fell by 18 percent, and the number listed as “subprime” fell by 3 percent

Enrollees experienced a 21 percent rise in automotive loans, an indication of improved financial well-being.

According to Miller, other studies have found that Medicaid expansion reduced use of payday loans and reduced interest rates for low-income people.

kbouffard@detroitnews.com

