Association for Public Policy Analysis & Management

I examine if the passage of the Affordable Care Act's (ACA) dependent coverage mandate in 2010 reduced financial distress for young adults. To test if increased health insurance coverage leads to improvements in financial well-being, I use a large, nationally representative database of anonymized consumer credit report information from the years 2009-2013. I employ a difference-in-differences research design to examine financial outcomes for young adults that were born in 1982-1983 and 1985-1986, with the first cohort serving as a control group. I find that the mandate reduced the amount of debt owed in third-party collections by 3 percent and new declarations of bankruptcies by 29 percent for young adults covered by the mandate. These effects are stronger in counties that experienced higher rates of uninsurance and unemployment at the time the mandate was passed. The estimates also show that these reductions are transitory, as they diminish after an individual ages out of the mandate at age 26. Furthermore, the results indicate that individuals that were relatively more liquidity constrained experienced greater reductions in financial distress. These results are consistent with other recent research showing that the implications of health care policy extend beyond measures of physical health.