The Great Equalizer: Medicare and the Geography of Consumer Financial Strain

TL;DR

This study shows that Medicare eligibility at age 65 significantly reduces debt collections and geographic disparities in collections, with notable effects in Southern regions with higher minority and disability populations.

Contribution

It provides empirical evidence on Medicare's impact on consumer financial health using credit bureau data and a regression discontinuity design.

Findings

30% reduction in debt collections at age 65

Two-thirds reduction in geographic variation in collections

Larger effects in Southern US regions with higher minority and disability populations

Abstract

We use a five percent sample of Americans' credit bureau data, combined with a regression discontinuity approach, to estimate the effect of universal health insurance at age 65-when most Americans become eligible for Medicare-at the national, state, and local level. We find a 30 percent reduction in debt collections-and a two-thirds reduction in the geographic variation in collections-with limited effects on other financial outcomes. The areas that experienced larger reductions in collections debt at age 65 were concentrated in the Southern United States, and had higher shares of black residents, people with disabilities, and for-profit hospitals.