Results From Massachusetts: Can the ACA Improve Personal Finances?

March 7, 2014

A new study conducted by the Federal Reserve of Chicago breaks down the impact of Massachusetts’ 2006 health reform on the financial outcomes of residents. The researchers compared credit scores, debt, and incidence of bankruptcy pre and post reform, and found that the protections of health insurance regulations reduced risk and improved personal finances.

As a result of health reform, credit scores in Massachusetts increased significantly, total debt past due decreased (with large reductions in delinquencies over $5,000), and the number of personal bankruptcies declined. The expansion of insurance coverage, guaranteed coverage of certain services, and caps on out-of-pocket limits are likely responsible for these outcomes. The researchers were able to establish a link by comparing the results for Massachusetts to that of other New England states with less insurance regulation, and of the elderly in Massachusetts, who did not benefit directly from the reform.



Source: Chicago Fed study. In Massachusetts, the proportion of visits that were self-paid significantly decreased following the implementation of state health reform. In 2005, 8.3% of emergency room visits were self-paid (averaging $1,000 per visit), falling to 4% in 2008.


These results build on an inventory of evidence that reaffirms that health insurance not only provides access to health care, but also protects citizens from financial ruin in the event of illness or injury.

Considering that the Affordable Care Act was modeled after the Massachusetts reform, there is reason to believe that the ACA will have a similar effect on personal finances nationally. Many previously uninsured individuals will now have lower overall costs once enrolled in Covered California. The cap on out-of-pocket limits is of particular importance, in that an individual cannot be held responsible for medical expenses in excess of $6,350. However, the results in Massachusetts may not be replicable in states that do not expand Medicaid, as many low-income people will remain uninsured and face difficulties paying medical bills.