Leticia Calvillo is a data analysis intern for Open Justice Oklahoma, a program of OK Policy, during the 2020 Spring semester. She is currently a George Kaiser Family Foundation Fellow in the MPA program at Brown University.
With 14 percent of residents uninsured, a significant portion of Oklahomans are at risk of incurring financially devastating medical debt. An important yet often overlooked outcome of Medicaid expansion is the positive impact it has on the financial well-being of beneficiaries. A full Medicaid expansion plan, as proposed by State Question 802, would likely result in improved financial security for at least 200,000 Oklahomans who would gain coverage.
Lack of insurance increases likelihood of financially devastating medical bills
Ironically, lack of financial access to preventive services forces uninsured people to seek care in the most expensive setting—a hospital emergency room. Although medical debt can accumulate over time from treatment for chronic illnesses, research finds that 2 out of 3 medical debt problems originated from a one-time or short-term medical expense. The majority of these expenses were the result of an emergency room visit or hospitalization caused by an untreated medical condition. Due to lack of coverage and financial means, uninsured people are disproportionately forced to skip needed medical treatment. In fact, 20 percent of uninsured individuals went without needed care because of cost compared to 8 percent of individuals who had public coverage.
Even a single medical event can cause a negative financial spiral. The Oklahoma Policy Institute has previously outlined the relationship between medical debt and financial problems. Those without health insurance are forced to pay unexpected medical bills with savings, high-interest credit cards, loans, a second mortgage and/or leaving other bills unpaid. Failure to keep current with these bills can lead to debt collections, damaged credit history, and even bankruptcy.
Medical debt is widespread, disproportionately affecting historically marginalized groups
Health care is extremely expensive for those without insurance, so it’s no surprise that medical debt problems are widespread. In the U.S., only 4 in 10 adults have enough money to pay for an unexpected expense of $1,000, yet most of those who cited problems paying medical bills reported larger needs. For instance, nearly half of the uninsured cited an amount of $5,000 or more. With bills this high, it makes sense that at a national level 1 in 4 working-age adults report having problems paying medical bills. In Oklahoma, this rate is even higher, with roughly 1 in 3 reporting past due medical debt. Oklahoma Watch has estimated that 520 Oklahomans are sued for unpaid hospital bills each month.
Certain groups are more vulnerable to unaffordable medical debt. Those who report poor health status, disabilities, and chronic conditions are at higher risk of burdensome medical debt. Individuals who are low-income, uninsured or are insured by plans with high co-pays, deductibles, or out-of-network coinsurance disproportionately report problems with medical debt. Likely due to the racial wealth gap and the lack of comprehensive insurance, women and people who identify as Black or Hispanic are more likely than their counterparts to report having medical debt problems.
Medicaid expansion has positive implications for short- and long-term financial health
Research shows that Medicaid expansion significantly reduces the number of people burdened with medical debt. This evidence suggests Medicaid expansion may safeguard against financial devastation for the most economically vulnerable. For example, the Oregon Health Insurance Experiment found that Medicaid expansion nearly eliminated catastrophic expenditure, or out-of-pocket medical expenses exceeding 30 percent of income. Leading studies (here and here) concluded health coverage reform results in sizeable reductions of average amount of debt, delinquencies and severe financial distress such as bankruptcies.
Medicaid expansion is also associated with a reduction in payday loans. These reductions often lead to an improvement in credit scores and lower interest rates offered to low-income individuals. These figures affect a household’s future access to credit markets when attempting to purchase a car or home. This is significant as it signals that Medicaid expansion positively impacts both short-term and long-term financial outcomes.
A simple Medicaid expansion plan is necessary to reap the maximum benefits
Only the adoption of a simple Medicaid expansion plan can ensure Oklahomans maximize the potential improvements to financial security. Governor Stitt recently announced his plan to fund Medicaid expansion through a block grant program. His proposal would attempt to add restrictions such as work reporting requirements and premiums. If these requirements survive a likely legal battle, they would add costly bureaucracy and cause Medicaid to operate more like private health insurance. As previously discussed, unaffordable premiums cause delays in seeking health care and increase vulnerability to medical debt even amongst the insured. The good news is Oklahomans have the opportunity to vote to adopt a full Medicaid plan. As outlined above, full Medicaid expansion plans, as contained in SQ802, have a proven track record of improving financial security.
Over the past 10 years, 20 million Americans have gained access to reliable health coverage through expanded Medicaid programs. Time and again, studies of this population have shown that Medicaid greatly reduces the probability of financial hardship by protecting against excessive medical expenditures. Since 2010, Oklahomans have been paying federal income taxes that have been used to expand coverage in other states. It is time to adopt a straightforward health care reform that will have a positive impact on health and economic outcomes for those living in our own state.