According to a recent survey,
the top reason cited for couples getting divorced is “basic incompatibility”
followed by “infidelity.” However, one reason couples may separate has no connection
to their feelings for each other—one of them being diagnosed with an expensive
illness. Though it may seem heartless to divorce your sick partner, the
practice of “medical divorce” frequently made financial sense if they were
uninsured. Prior to the enactment of the Affordable Care Act (ACA), if one spouse
became sick and needed expensive treatments, the couple would have to drain
their savings (including retirement) before the partner qualified for Medicaid.
By divorcing, the healthy partner could retain their retirement account and
savings while having the sick partner qualify sooner.
Under the ACA, Medicaid expanded.
The income levels at which adults could qualify were set at 138% Federal
Poverty Level (FPL) and did not take assets into account. Different types of
people also qualified, including childless adults. However, due to the Supreme
Court’s Ruling in National Federation of Independent Business v. Sebelius, not
all states were required to expand. Roughly half did not. The silver lining of this was that researchers are
now able to use this exogenous variation in order to analyze the effects of
expanding Medicaid. In a recent NBER Working Paper, “Did Medicaid Expansion ReduceMedical Divorce” David Slusky and Donna Ginther use it to examine the effect of
Medicaid expansion on Medical Divorce. Their results seem to suggest a decrease
in Medical Divorce as a result of Medicaid Expansion. Some good news for
Valentine's Day.
Slusky and Ginther run what is
called a difference-in-difference estimation. This separates everyone they
study (50-64 year olds) into two groups—those who live in expansion states and
those who do not. It also separates the sample by time “before 2014” when
Medicaid primarily expanded in and “after 2014.” They then are able to look at
the prevalence of divorce among people in Expansion States and Non Expansion
States both Before and After.
First, the researchers had to be
sure that whatever changes they saw in divorce rates couldn’t be attributed to
something else. Perhaps in 2014 something happens to make divorce rates change in
only Expansion States—like lower unemployment rates which caused lower divorce rates.
To help strengthen their findings they present the average Age, and
Unemployment Rate as well as the Prevalence of Divorce before and after in
control and treated states.
© 2017 by David Slusky and Donna Ginther
The average age in their control
group is roughly equal, as are the changes in the unemployment rate over time.
However, whereas the divorce rate becomes higher in the control states during
this time, the divorce rate in treated states increases. The “difference-in-difference”
of -0.94 can be interpreted as a .94 percentage point decrease in divorce prevalence
among those living in Medicaid Expansion states.
© 2017 by David Slusky and Donna Ginther
Their regression results are shown
above. Each numbered column adds a different treatment effect. Controlling for
treatment, year, state, month, and unemployment the results remain similar. By
doing this they account for the possibility that something else related to one
of those factors was actually the cause of the difference in the rates of
divorce.
The Medicaid Expansion appears to
have reduced the prevalence of divorce among those aged 50-64 by .94 percentage
points (or 5.6%) perhaps in part due to a lesser need for Medical Divorce.
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