Emergency unemployment benefits and health care spending during Covid

Abstract

ObjectiveTo estimate the impact of the $600 per week Federal Pandemic Unemployment Compensation (FPUC) payments on health care services spending during the Covid pandemic and to investigate if this impact varied by state Medicaid expansion status.Data SourcesThis study leverages novel, publicly available data from Opportunity Insights capturing consumer credit and debit card spending on health care services for January 18–August 15, 2020 as well as information on unemployment insurance claims, Covid cases, and state policy changes.Study DesignUsing triple‐differences estimation, we leverage two sources of variation—within‐state change in the unemployment insurance claims rate and the introduction of FPUC payments—to estimate the moderating effect of FPUC on health care spending losses as unemployment rises. Results are stratified by state Medicaid expansion status.Extraction MethodsNot applicable.Principal FindingsFor each percentage point increase in the unemployment insurance claims rate, health care spending declined by 1.0% (<0.05) in Medicaid expansion states and by 2.0% (<0.01) in nonexpansion states. However, FPUC partially mitigated this association, boosting spending by 0.8% (<0.001) and 1.3% (<0.05) in Medicaid expansion and nonexpansion states, respectively, for every percentage point increase in the unemployment insurance claims rate.ConclusionsWe find that FPUC bolstered health care spending during the Covid pandemic, but that both the negative consequences of unemployment and moderating effects of federal income supports were greatest in states that did not adopt Medicaid expansion. These results indicate that emergency federal spending helped to sustain health care spending during a period of rising unemployment. Yet, the effectiveness of this program also suggests possible unmet demand for health care services, particularly in states that did not adopt Medicaid expansion.