Assessing the Credit Consequences of Expanded Medicaid Access for Formerly Incarcerated Wisconsinites and Their Families

• In Event: Bolstering the Safety Net at a Critical Moment: Policy and Programmatic Approaches to Successful Reentry

Abstract

Recent research demonstrates that incarceration is detrimental for credit and financial wellbeing and that expanded Medicaid access for recently released individuals is beneficial for employment, healthcare use, and avoiding reincarceration. However, no research has directly examined whether healthcare access may be a channel for promoting improved financial wellbeing and credit outcomes for formerly incarcerated individuals and their families. This paper addresses this gap by exploiting two recent policy changes in Wisconsin that expanded Medicaid access: the rollout of a new pre-release Medicaid enrollment assistance program and a policy shift requiring that Medicaid benefits be suspended rather than terminated during incarceration spells.

We estimate the effect of these changes on the credit outcomes of formerly incarcerated individuals and their household members by utilizing a new, unique data linkage of Wisconsin administrative data and credit report data. Specifically, we have linked 11 years (2014-2024) of consumer-level credit report data to the Wisconsin Administrative Data Core (WADC), which is maintained by the Institute for Research on Poverty at UW-Madison. The WADC contains linked and harmonized individual-level longitudinal administrative data from nearly all Wisconsin social welfare programs, the Wisconsin Department of Corrections, the Milwaukee County Sheriff’s office, and state court records. Notably, just over 86% of incarcerated individuals in the WADC have credit bureau records, ensuring a robust sample for analysis. Because the credit data includes household-level linkages, we are also able to test whether these policy changes affected the credit outcomes of household members, which is relevant given recent research highlighting the financial implications of having a formerly incarcerated family member.

We employ two-stage least squares instrumental variable models and difference-in-difference models to test how increased Medicaid access affects debt levels, delinquencies, derogatory public reports (e.g., bankruptcy, tax liens), and credit scores. Because currently incarcerated individuals do not have control over the timing of their release and cannot delay release until a more favorable policy regime is in place, we argue that release dates are as good as randomly assigned conditional on covariates. Expanding healthcare access for this population is often viewed as essential for reducing recidivism. However, stark racial disparities in wealth, incarceration, and health insurance coverage in the United States suggest that expanding Medicaid for this population could also have the added benefit of reducing broader racial disparities in financial wellbeing. This analysis investigates this potential benefit while providing important baseline descriptive data on the credit wellbeing of incarcerated individuals and their household members.

Authors

• Brielle Bryan, Rice University
  Presenting Author

• J. Michael C Collins, University of Wisconsin-Madison
  Non-Presenting Co-Author

• Bezankeng Njinju, University of Wisconsin-Madison
  Non-Presenting Co-Author