Medicaid Expansions and Contractions: the OBBBA, Poverty & Financial Insecurity

Session Submission Type: Panel

Abstract

The enactment of nearly one-trillion dollars in budget reductions to Medicaid, cuts to SNAP and limitations on immigrant eligibility in the One Big Beautiful Bill Act of 2025 (HR1) raise concerns for the financial well-being of the low-income population. Since the Act largely targets Medicaid, assessment of poverty and financial impact requires poverty measures sensitive to loss of health insurance benefits (Health-Inclusive Poverty Measure; e.g. Creamer 2025; Remler, Korenman and Hyson 2017) as well as estimates of impacts of Medicaid on broader financial security.Three of the panel’s papers employ the Health Inclusive Poverty Measure, and one studies the impact of Medicaid expansions on medical debt. 
     Averett and Smith use repeated cross-sectional data from the National Financial Capability Study for 2009-2024 to study the impact of Medicaid expansions on financial behaviors and financial literacy. Preliminary results confirm the substantial impact of Medicaid expansion on insurance coverage of the low-income population. Beyond coverage increases, results show that Medicaid expansion substantially reduces the prevalence of medical debt and increases attachment to the banking system among lower-income households. No effect is found on the use of fringe banking products.
     Creamer will present the latest Census report from the Health Inclusive Poverty Measure research series covering 2025. Prior reports have shown the sizable static impacts (poverty reductions) from health insurance benefits: employer-sponsored insurance, Medicare, Medicaid, and ACA premium subsidies.  Estimates for calendar year 2025 will provide further insights on recent changes such as the continued unwinding of Covid-era emergency provisions that reduced caseload churning in the program in recent years.
     Caballero and Wilson present the first estimates of health-inclusive poverty for (imputed) undocumented immigrants and mixed-status families. Since the OBBBA targets eligibility of several categories of legally-present humanitarian immigrants, their estimates shed light on the potential poverty impact of loss of health insurance and other social benefits. They extend the analysis to the state level by pooling CPS ASEC data from 2022 to 2024, while accounting for overlapping samples across years resulting from the CPS rotating design. They examine how poverty and program impacts vary across states, particularly where immigrant eligibility for public benefits differs across jurisdictions.
     Hussein, Korenman and Hyson provide baseline projections of the impact of OBBBA cuts to Medicaid and SNAP benefits for health inclusive poverty rates. To support state-level estimates, they provide the first implementation of the HIPM in American Community Survey data. Their naïve, baseline projections estimate poverty impacts assuming no behavioral changes among affected households and no policy adjustments by states. Using propensity-score matching procedures, they adjust these naïve estimates for household behavior changes in labor supply, and, for Medicaid losers, alternative insurance status and type, and out-of-pocket spending.
     The information from this panel will help state and local governments and non-profit organizations to plan policy and programs responses needed to offset potential impacts of the OBBBA on poverty and financial security.

Policy Area

• Poverty and Income Policy

Chair

• Regina S. Baker, University of North Carolina, Chapel Hill

Discussants

• David Brady, University of Southern California

• Eva Marie Stahl, Undue Medical Debt

Organizer

• Sanders D. Korenman, Baruch College (City University of New York)

Individual Presentations

• Medicaid Expansion and Financial Behavior - Presenting Author: Julie K Smith, Lafayette College

• Poverty, Health Coverage, and State Variation Under the Health-Inclusive Poverty Measure - Presenting Author: Jose Enrique Caballero, Columbia University

• Health Inclusive Poverty Measure in the United States: 2025 - Presenting Author: John Creamer, U.S. Census Bureau

• Impacts on Poverty of the “One Big Beautiful Bill” Act: Baseline Projections and Behavioral Adjustments - Presenting Author: Mustafa Hussein, CUNY School of Public Health; Non-Presenting Co-Author: Rosemary Hyson, Baruch College (City University of New York); Non-Presenting Co-Author: Sanders D. Korenman, Baruch College (City University of New York)