Emma Sandoe is a PhD student in Health Policy, Political Analysis at Harvard and a former spokeswoman for Medicaid at the Centers for Medicare & Medicaid Services.
This week David Slusky and Donna Ginther released an NBER working paper which suggested that Medicaid expansion reduced the prevalence of divorce by 5.6% among those aged 50-64.
The thinking is this: Prior to the passage of the Affordable Care Act, the only way that many middle-income adults could qualify for Medicaid coverage was to spend down their assets to qualify for one of Medicaid’s eligibility groups. To avoid spending all of their assets on medical and long-term care services, many people engaged in what is known as “medical divorce.” When one spouse would become ill and need Medicaid services (particularly for long-term care services that Medicare does not cover), the couple would divorce so that the assets of the sick spouse would qualify them for the Medicaid asset test (often around $2,000 for an individual and $3,000 for a couple).
Medicaid expansion changed things. It allows all people regardless of assets to apply for Medicaid coverage so long as their income is below 138% of the federal poverty level. Using a difference-in-difference approach comparing changes in divorce rates (pre to post ACA) in states that expanded Medicaid eligibility to 138% of the poverty level to states that did not expand, the authors found that divorce rates fell in expansion states.
One problem is that Medicaid expansion did not entirely get rid of the asset test.
Medicaid is not one program. There are many avenues that a person can take to get Medicaid. The benefits and structure of the program look different for each eligibility group. Broadly speaking we can break Medicaid eligibility into modified adjusted gross income (MAGI) and non-MAGI eligibility.
The Affordable Care Act requires all states to use the MAGI to calculate the eligibility for certain types of applicants (pregnant women, children, and the newly eligible Medicaid expansion adult population). These populations receive benefits that are similar to private health insurance – hospital services, doctor services, and pharmaceutical drugs. They do not receive Medicaid long-term care services.
There are certain groups that are exempt from MAGI eligibility (referred to as non-MAGI). These are Medicaid programs for the blind, disabled, and those over 65. These groups receive long-term care services and for those services they were (and still are) subject to asset tests. Despite some spousal impoverishment protections, this is the population that would likely engage in medical divorces because private insurance and Medicare does not cover long-term care and Medicaid is the primary payer for long-term care services. Without Medicaid, people often pay up to $60,000-$80,000 annually for long-term care services which could impoverish families.
There could be some people that are early retirees or couples that might need cancer care or other expensive hospital procedures and would qualify for asset-test free Medicaid expansion, but these are likely rare cases linked to divorce.
The paper may benefit from looking at divorce rates for populations over the age of 65 in states that have expanded versus those that did not expand. This might provide a more complete picture since the population over 65 is likely to include some people who would divorce because of Medicaid asset test eligibility. If divorce rates decreased by a similar amount for this group as for the under-65 group the authors studied, that would suggest that there are other factors other than Medicaid expansion causing rates to fall (because Medicaid expansion did not apply to the elderly population).
Not only have (non-MAGI eligibility) asset tests not gone away, they’ve become more stringent. For example, in California, the asset test for a couple to qualify for Medicaid disability coverage was $3,000 in 2016. California has not increased that amount in nearly 30 years. The real value of that asset has halved since it was put into place in 1989. I wrote a longer explanation of this issue here.
The financial security that Medicaid provides does have large scale effects. Financial insecurity is a leading cause of divorce in the US. It is conceivable that there are more financially secure couples who are less likely to divorce because of the safety net of Medicaid expansion. Alternatively, there are many other causal factors that could be reducing divorce as the authors note, but unfortunately asset limits remain a hurdle for many couples to overcome to receive Medicaid services.
Update: David Slusky responded to this post in a tweet that includes a chart pertaining to the 65+ population.
