WP 20-42/R – In July 2005, the state of Missouri implemented a series of cuts to its Medicaid program. These cuts resulted in the elimination of the Medical Assistance for Workers with Disabilities program, more stringent eligibility requirements, and less generous Medicaid coverage for eligible individuals.
Previous versions of this working paper were originally published in November 2020 and November 2021.
Overall, the reforms removed about 100,000 Missourians from the program and reduced the value of the insurance for the remaining enrollees. Using data from the Medical Expenditure Panel Survey, we show how these cuts increased out-of-pocket medical spending for individuals living in Missouri. Using individual-level credit bureau data and employing a border discontinuity differences-in-differences empirical strategy, we show that the Medicaid reform led to increases in both credit card borrowing and debt in third-party collections. The magnitude of our estimates suggests there may be important asymmetries in the financial effects of shrinking a public health insurance program when compared with a public health insurance expansion.