KU Economists: Medicaid Expansion May Have Reduced ‘Medical Divorces’

Feb 20, 2017

Divorce rates that expanded Medicaid were lower among adults ages 50-64 than in states that did not expand Medicaid, a study by two KU economists finds.
Credit David Slusky and Donna Ginther

The Affordable Care Act has been credited – and blamed – for lots of things, but lowering the divorce rate generally hasn’t been one of them.

Not until now, anyway. A paper co-authored by two KU economists suggests that states that expanded Medicaid saw fewer so-called medical divorces than states, like Kansas and Missouri, that didn’t expand Medicaid.

How so?

Used to be Medicaid had an asset limit. The program’s income eligibility requirements limited the maximum amount of assets and income individuals could possess.

The Affordable Care Act, also known as Obamacare, did away with the asset requirement.

What does that have to do with divorce?

In the pre-ACA days, if a spouse came down with a debilitating illness but had assets that exceeded the Medicaid threshold, the couple faced an agonizing choice: Spend down their assets, including their retirement savings, until they qualified for Medicaid. Or get a divorce so that the non-sick spouse could preserve his or her assets.

Obamacare’s expansion of Medicaid extended coverage to adults under age 65 with incomes up to 138 percent of the federal poverty level. With no asset test, as long as the sick spouse met the income test there was no need for the couple to drain their assets.

KU health economist David Slusky co-authored the working paper looking at the relationship between Medicaid expansion and "medical divorce."
Credit University of Kansas

In states that didn’t expand Medicaid, of course, couples still face the same gut-wrenching dilemma. And for the two University of Kansas economists, David Slusky and Donna Ginther, that presented a ready-made laboratory experiment: Might the states that did expand Medicaid have experienced lower rates of divorce than those that didn’t?

In a working paper distributed last week by the National Bureau of Economic Research, the two found that states that expanded Medicaid had a 5.6 percent decrease in divorce among people ages 50-64 compared with states that didn’t expand Medicaid.

As Slusky explains, the 50-64 population is the one most likely to have sufficient assets and be old enough to find themselves in a potential medical divorce situation, but not old enough to qualify for Medicare.

While there’s lots of anecdotal evidence about medical divorces – New York Time columnist Nicholas Kristof famously devoted a column to one back in 2009 – Slusky and Ginther’s working paper appears to be the first systematic look at the relationship between Medicaid expansion and divorce rates.

“The concern was that this might be rare enough that we’re just not going to see anything,” Slusky says. “And the fact that we saw something and that it was precisely estimated and substantial, around 5.6 percent, is kind of the sweet spot – big enough to write home about but not too big that I don’t believe it.”

Does the paper conclusively prove that the lower rates of divorce were attributable to Medicaid expansion? No – but it’s highly suggestive. As the chart at the top of this story shows, the divorce rates in expansion and non-expansion states ran relatively parallel until the ACA was passed.

“And then after expansion, the lines really cross and go in different directions,” Slusky says. “You put all of these things together and this is about as good as it gets in terms of quasi-experimental economic analysis.”