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Love it or hate it, Obamacare seems to be working, at least for low-income Americans who otherwise wouldn’t have access to healthcare.

That’s according to a working paper published Monday by the National Bureau of Economic Research, which found that offering health insurance to these consumers helped them avoid insurmountable debt. For those newly covered by Medicaid since 2014, the study says, their medical debt was reduced by about $600 to $1,000 each year.

Credit.com has extensively covered the damage medical debt can wreak on one’s credit profile. Some hospitals or medical providers offer expensive credit cards with introductory rates that quickly ramp up to over 20% and patients can get taken to court over bills they can’t afford to pay. In some cases, spouses of patients have been pursued for payment even though they didn’t live in a common law state.

“I just turned 26, and I can’t even get a new contract with AT&T without a $750 security deposit, let alone finance a new (used) vehicle,” Richard Barnes told the New York Times recently. He was reportedly uninsured when he was diagnosed with appendicitis three years ago. “When I was moving in May 2015, I had extreme trouble finding someone who would rent to me.”

Inside the Study

As the Times reported, the new study examined credit reports on a sample of Americans across the country. Researchers then compared debt incurred by people in two different sets of states: “those that expanded Medicaid to provide free insurance to those earning under about $16,000,”and those that either “chose not to cover that population or had expanded their programs earlier.”

The researchers honed in on the 25% of ZIP codes with the highest percentage of low-income, uninsured people before 2014 to compare debt incurred by those in the unchanged states with the debt of those in states offering new insurance options.

Turns out, Medicaid expansion did affect how many bills were sent to collections and the amount they were for. Researchers arrived at their $600 to $1,000 estimate by using the American Community Survey to approximate that 17% of individuals in the measured areas were uninsured and had incomes below 138% of the federal poverty level.

“If we assume that half of this group gained coverage as a result of the Medicaid expansions and scaled our estimates by this figure, the implied treatment-on-treated (TOT) estimates range between -$600 and -$1,000,” the report said.

The study did have two caveats: It could only examine those with credit reports and couldn’t pinpoint exactly who got Medicaid. As the Times put it, “Instead, it tracked everyone in the places where researchers anticipated the biggest changes in Medicaid enrollment.”

If you have outstanding medical bills, it’s a smart idea to review your free annual credit reports for accuracy and dispute any errors you find. You can also view two credit scores for free, updated every 14 days, on Credit.com.

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