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Public Health Insurance and Access to Credit

Author

Listed:
  • Claire Célérier

    (University of Toronto)

  • Adrien Matray

    (Princeton University)

Abstract

In this paper, we exploit household level data over the 1984-2014 period to estimate the effect of publicly-provided health insurance on household overall financial situation. By using staggered expansions of Medicaid across states, we find that eligible households face lower out-of-pocket medical expenses, fail less to pay for basic expenses such as housing and food, and default less on their mortgages. We then look at the effect on household access to mortgage. Eligible household are more likely to hold mortgage debt, which translate into higher home equity, and wealth. Using mortgage application data to tease out demand and supply, we find that application are less likely to be denied when Medicaid coverage is extended. Lenders are therefore responding to the decline in financial risk due to lower out-of-pocket medical expenses. Overall, access to health insurance improves household financial situation.

Suggested Citation

  • Claire Célérier & Adrien Matray, 2017. "Public Health Insurance and Access to Credit," Working Papers 2017-3, Princeton University. Economics Department..
    • Handle: RePEc:pri:econom:2017-3
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    More about this item

    Keywords

    Household Finance;

    JEL classification:

    • H51 - Public Economics - - National Government Expenditures and Related Policies - - - Government Expenditures and Health
    • I13 - Health, Education, and Welfare - - Health - - - Health Insurance, Public and Private
    • I38 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - Government Programs; Provision and Effects of Welfare Programs

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