Is Obamacare really a wealth-care law?

A new study suggests the Affordable Care Act could reduce personal bankruptcies.

By Money Staff Feb 19, 2014 12:50PM

This post comes from Quentin Fottrell at partner site MarketWatch.

MarketWatch on MSN MoneyHealth-care reform in Massachusetts has helped to improve credit scores, reduce debt and even cut the number of personal bankruptcies by 20%, a new study finds. Taken as a test case, some experts say this could bode well for Obamacare’s impact on the financial health of American households.

Pills and cash © CorbisThere are many similarities between the health-care reform in Massachusetts in 2006 and President Obama’s 2010 Affordable Care Act. Both aim to achieve near-universal coverage by combining a mandate for individual insurance with insurance market reforms and a broad expansion of subsidized coverage for low- and middle-income households, according to "The Effects of the Massachusetts Health Reform on Financial Distress" by economists at the Federal Reserve of Chicago and the University of Notre Dame.

"The context of our study is a major state-level reform that closely resembles the Affordable Care Act, making this analysis highly relevant for the ongoing debate surrounding the current federal program," economists Bhashkar Mazumder and Sarah Miller concluded. 

The impact of reform on personal bankruptcy, delinquency and even credit scores was far more pronounced for those whose credit scores were lower before the reform. But those with higher credit scores before the reform -- and better access to credit -- experienced a larger relative decline in total debt, the authors found after analyzing credit report data that covered one-fifth of the Massachusetts population.

"Ideally, full implementation of federal health care reform will lower the out-of-pocket costs of health care enough to cause a similar decline in medical debt, one of the leading causes, along with layoffs and divorce, of bankruptcy filings," says Ed Mierzwinski, consumer program director for the non-profit U.S. Public Interest Research Group.

"This is the first study on health care reform to extend to measures of bankruptcy,” says Jonathan Gruber, a professor of economics at the Massachusetts Institute of Technology, who was also a principal designer of Massachusetts' health-care overhaul and consulted on the Affordable Care Act.

It confirms findings from a randomized expansion of Medicaid in Oregon, which showed enormous reductions in financial stress, Gruber says. (In that earlier study, "The Oregon Health Insurance Experiment," published in 2012 in the “Quarterly Journal of Economics,” Medicaid recipients who gained health insurance coverage in 2008 through a lottery reported less financial strain and fewer medical bills than those who didn’t receive any coverage through the lottery.)

But others doubt that the Affordable Care Act will have the same effect.

"Since Obamacare is extending Medicaid in 25 states, we would expect fewer medical bankruptcies amongst persons with incomes at or near the federal poverty line," says Stephanie Woolhandler, professor of public health at Hunter College in New York. "For the non-Medicaid-eligible population, the effect of Obamacare on medical bankruptcies is likely to be minimal. Even insured people may end up with ruinous out-of-pocket costs if they experience a prolonged or expensive illness."

Woolhandler co-authored a 2011 study on bankruptcy in Massachusetts, which found that medical bankruptcies eased only slightly to 52.9 percent in 2009 from 59.3 percent in 2007, but it only surveyed 199 bankruptcy filings.

Americans also face some strong headwinds. Although it's slowing, health-care inflation is still running at a faster pace than stagnant wage growth, says Steve Wojcik, vice president of public policy at the National Business Group on Health, a membership group for employers.

"That's a big threat to financial security," he says.

Obamacare will also reduce the total number of hours worked by about 1.5 percent to 2 percent from 2017 to 2024, according to data released this month from the Congressional Budget Office. "The Massachusetts study factored in unemployment rates as a variable to be controlled for rather than being affected by what they’re measuring," Wojcik says. To be sure, the CBO report refers to labor supply and participation -- meaning new job opportunities could also be created -- not actual jobs.

Obamacare will certainly help those who in the past would have declared bankruptcy and could not afford health care, says Wendell Potter, a former vice president of corporate communications at health insurer Cigna. It puts limits on how much insurers can charge people because of their age, provides subsidies for those with low incomes and prevents insurers from denying coverage to people with pre-existing conditions. Additionally, people under age 26 are covered under their parents’ insurance. It won’t protect them entirely, however.

"The sad reality is that even with the protections in the Massachusetts law and Obamacare, people who are in low-paying jobs and high-deductible plans are still at risk of bankruptcy if they get sick or injured," Potter says. 

More from MarketWatch


Feb 19, 2014 2:49PM
Obamacare is a turd, no matter how many sprinkles you put on it doesn't make it cake. If Obamacare is the deciding factor of you not filing bankruptcy then you probably don't have anything anyway. Responsible people provide for themselves, period! Do I like paying high premiums? No. Why do I even though I now have to have to include maternity and contraceptives in my policy that I will never use? I do to protect me and my family. However, this turd called Obamacare does nothing to reduce the actual cost of healthcare, it instead moves the cost to us producers  further burdening us who work and sacrifice to provide for our families. I believe in helping those who are " truly" in need. I do not help the lazy and irresponsible. I also do not believe in stealing from others just to give to the failures of society. Charity is giving from your own pocket. Giving from others pockets is just theft. Obamacare is just theft! 
Feb 19, 2014 2:53PM
I've seen spins before but this article takes the cake.  It reminds me of the guy who murders his parents and asks for leniency from the judge because he's an orphan.  Obama care is a tax.  It is a redistribution of wealth and I do not mean from the one percenters.  It is taking trillions of dollars out of hard working families budgets and putting it into the governments hands so they can take care of anyone out there who cant or chooses not to take care of themselves.  If you do not understand this you probably voted for Obama.  It's easy to sell your soul to this demon and his ideas.  Establish an enemy. Take it from them. Give some to the idiots on the bottom of the human chain and then get re-elected.
Feb 19, 2014 2:41PM

No it is about redistribution of wealth.  


How can something that offers subsidizes from the government be anything else?   


Just another key stepping stone in transforming the US into a European styled socialistic economy with higher taxes, unionized work force, and punishing business regulations.



Feb 19, 2014 2:39PM
What a crock! People paying higher rates for "health care" is certainly NOT going to slow bankruptcies…if anything,it will accelerate them. Where do these commentators come from..Mars?
Feb 19, 2014 2:40PM
It's all about the money, power, greed, CORRUPTION, abuse of power.Moreover, it is not anywhere I n the REALM of AFFORDABLE. 
Feb 19, 2014 2:53PM

The liberal media just keeps looking for new ways to polish a t#rd, don't they?

Mass, has lost 1.2% of their population since they passed the insurance leech law.

Here is a promise dem bloodsuckers, the feds will not be allowed to bail you out, when you can no longer afford insurance.

You dem parasites are resposnible for this, promise you, we will make you pay for it.


Feb 19, 2014 3:17PM
Last year when my husband was in the hospital they charged him 80 bucks for 2 aspirin and 6,000 for an overnight stay, not including the Doctors fee of another 2 grand. This is where they should have started their "health care reform" - the rape of citizens by Doctors and Hospitals taking advantage of people at their neediest point. I am one of the 1,000's that "could keep my insurance" then lost it to Obummercare and now pay almost twice the amount for less coverage. Socialized medicine payed for by the middle class to cover all the Mamas cranking out welfare babies.  It is a joke.

First American Tyranny: We’re Cool With That
Why President Obama hasn’t been physically dragged out of office at this point is one of those questions that will likely remain a mystery.

 In case you missed it, Obama this week (Jan. 17) declared to his Cabinet that if Congress doesn’t do what he wants it to do, he will simply use executive orders to create and enforce any law he chooses.


  Based on the silence from my many liberal acquaintances, the response to Obama from the Left is “so what?”

   Obama repeated his declaration to the Democratic members of Congress, who then walked out of the meeting without talking to reporters.

   Again, silence.

   Did Obama talk too fast? Was he not speaking clearly?

 For my hard-headed friends on the Left, let’s review:

The president of the United States just declared that Congress is null and void as far as he’s concerned.

 Except for the fact that Congress will continue to burn through money like a hot knife through butter, and absent a formal declaration of dissolution, the Legislative Branch has effectively ceased to exist.

 It’s still there in the sense that it occupies space, but that’s it.

 Obama is acting like Jack Nicholson in “Mars Attacks”:


“I want the people to know that they still have two out of three branches of the government working for them, and that ain’t bad.”

 Except the invader here isn’t from another  planet or even another country.

 We’ve just witnessed a home-grown coup. (And one that many of us saw coming even before Obama’s first presidential victory.)

We are now living — officially — in a dictatorship.

   So where’s the outrage?

   Is Twitter so fascinating that you just can’t be bothered?

   Grumpy Cat got your tongue?

   Bill Maher didn’t make fun of it, so it hasn’t happened?

   Is it the fluoride in the water?

   Is it the legalized pot?


Or is it that after years of dumbing down public education, we are simply too stupid to realize what just happened?

 Another review for the Left:

 The government derives its authority from the people. The Constitution is the contract that limits and defines what the government can do. The president under the contract is supposed to work with Congress and enforce the laws that Congress passes.

   President Obama has just said he will not follow that contract he has with the people. He has broken the contract.

   No Constitution, no presidency.

 So if Obama, despite breaking his contract, continues to accept and enjoy all the perks of the president’s office while failing to honor his obligations, that makes him something else other than the president.


I used to wonder how millions of Germans could allow a dictator to come to power.

We are now demonstrating exactly how it happens.

Feb 19, 2014 3:02PM
This piece reads like a press-release by the white house.
Feb 19, 2014 2:54PM
Damn, my copay went from $20 to $1,500. with a 30% increase in monthly rates on top of that. I guess that  money went to MA. and OR.
Feb 19, 2014 2:50PM
This is just the first of many disguised "help" programs for the government to take total control, next is our money system, then food. Get ready if your smart you will plan ahead, or well soylent green
Feb 19, 2014 3:01PM

Japan has an insurane based health care system. They first said insurances were not allowed to make a profit on health care. Then they regulated the cost of medical care and medicines. America is all about the profit for shareholders. Japan is nuimber 10 now while America is number 37. Hmmmmm

Feb 19, 2014 3:15PM
It's a transfer of wealth, nothing more, nothing less. Somebody is paying for it and it's the producers in our society, not the takers....
Feb 19, 2014 3:19PM
It's kinda like being offered 50 ft of water in which to drowned vs. 100 ft. What's the difference? Part of a citizen's responsibility in life is to take care of themselves and do their best to insure the medical care is not required,  but personal responsibility seems to be the devil these days. Of course, there are times when illnes**** those through no fault of their own. Americans are a compassionate lot, but at some point there is going to be rationing of services which will be due in large part to a disproportionate number of people sucking up the funds due to their own irresponsible behavior and lifestyle choices.  The only people wiped out in this process are the middle class people that are truly the backbone of the system. The uber rich and elite political groups will ALWAYS insure they are not part of the herd.
Feb 19, 2014 3:44PM
I've had nothing but red tape and hassle over the entire "change" in the healthcare system. It's a complete mess and is just a veiled way for people who are responsible, pay taxes and handled their own bills to pay for more of the bottom-feeding trash that expect a handout.
Feb 19, 2014 3:57PM

What I find amusing about Obamacare is that it's clearly a redistribution of wealth. What's even funnier is it's a redistribution of wealth from the poor to the rich. If an insurance company doesn't make the kind of profit they expect to make, the tax payer will be on the bill to subsidize them. Tax payers also pay for Medicaid expansion, money that will go to hospitals and healthcare businesses, and they also pay for subsidies, money that goes to the insurance company. All insurance companies have to do is supply new services that were grossly marked up in the first place, take more money for themselves, as they already are, then "claim" that they aren't making a profit, and bingo, you are, yet again, paying for the rich to become richer, doesn't it just remind you of the Bailouts?


By the way, for you idiots who support Single Payer/Govt Run healthcare, lets look at the facts. All healthcare organizations combined spent about $1 Billion on advertising, and total of about $1.6 Billion on paying CEO salaries. We spend $2.6 TRILLION a year on healthcare, which means the "Greedy" CEO's and advertisers account for 0.1% of healthcare costs, it's imperceptible, and basically doesn't affect the cost of care. What's a really big problem are the very high administrative costs, which account for $407 Billion, or 15.7% of healthcare spending. This is primarily due to purchasing the newest equipment possible. It's purchased because doctors are afraid of lawsuits, many of which can be avoided if they test for everything, and test with the newest equipment. Lawsuits in potential can account for as much as 35% of healthcare spending, as the majority of devices, equipment, drugs, ect are given out to avoid lawsuits. We can easily slash those costs if we can put into place reasonable protections for doctors and healthcare officials so that they can only be sued for gross negligence, and only for a very limited amount.


Either way, our main problem in this country isn't healthcare, it's about our lifestyles and food choices. We eat more processed food than any other country on Earth, and' it's easy to see why. Because of subsidies, we can actually buy processed food at a lower price than it costs to make. No other country on Earth, that I'm aware of, does anything even close to that, and because of that, we pay for it with our health. We eat too much sugars and fats, and not enough vitamins and minerals. Sugars and fats feed health problems, especially cancer, and destroy healthy cells and the immune system. Even if Single Payer is more efficient (it's not) and cheaper, it's not going to solve the main problem, we are making ourselves sicker and sicker, and as long as we do that, healthcare costs are going to keep going up.

Feb 19, 2014 3:46PM
Is this before or after we pay the mandatory $12,000 out-of-pocket family deductible PER YEAR  and IN ADDITION to the monthly premiums that cost the same as a high-end car payment? Keep in mind that you must pay the $12K before your policy covers ANYTHING!!!!
Feb 19, 2014 3:57PM
The main-stream media is doing their best to bolster their ordained messiah and polish his pile of feces, also known as "ObamaCare."

It would seem even many of his most ardent followers are beginning to see cracks appear in his divinity, and the scene behind the curtain ain't so "great and powerful" after all.
Feb 19, 2014 4:36PM

If you like your Dr., you can keep your Dr.  Perod.

More obama lies...........


Vote to get your country back people.

Feb 19, 2014 4:14PM





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