Estimating the effects of health insurance and other social programs on poverty under the affordable care act

Abstract

The effects of health insurance on poverty have been difficult to ascertain because US poverty measures have not taken into account the need for health care and the value of health benefits. We developed the first US poverty measure to include the need for health insurance and to count health insurance benefits as resources available to meet that need-in other words, a health-inclusive poverty measure. We estimated the direct effects of health insurance benefits on health-inclusive poverty for people younger than age sixty-five, comparing the impacts of different health insurance programs and of nonhealth means-tested cash and in-kind benefits, refundable tax credits, and nonhealth social insurance programs. Private health insurance benefits reduced poverty by 3.7 percentage points. Public health insurance benefits (from Medicare, Medicaid, and Affordable Care Act premium subsidies) accounted for nearly one-third of the overall poverty reduction from public benefits. Poor adults with neither children nor a disability experienced little poverty relief from public programs, and what relief they did receive came mostly from premium subsidies and other public health insurance benefits. Medicaid had a larger effect on child poverty than all nonhealth means-tested benefits combined.