Association for Public Policy Analysis & Management

In this paper we examine how the provision of health insurance affects the consumption and borrowing choices of young adults. Using the quasi-experimental nature of the ACA's 2010 dependent coverage mandate as a source of exogenous variation in medical expenditure risk for young adults, we estimate a differences-in-differences model using a large, nationally representative data set of credit bureau information. Our estimates show that individuals affected by the mandate increased their use of credit cards, auto loans, and student loans while also maintaining higher balances on these loans. Coefficient estimates also show that lenders provided affected individuals with higher credit limits and larger loans. These findings suggest that a reduction in medical expenditure risk due to insurance coverage may allow young adults to expand their consumption and borrowing and accept additional financial risks.