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Obamacare helps save low-income people from losing their homes, study shows

Participants hold signs in New York, NY while protesting efforts to repeal and replacement of the Affordable Care Act on July 29, 2017.
Pacific Press | Getty Images

The price of health care is the biggest concern among Americans these days, according to a recent FOX News poll.

That makes sense, given that Americans routinely postpone or skip medical treatment when they can't afford it. Others who need care must make difficult choices, like paying for care with money they need for housing, according to a recent study published in the Journal of Public Economics.

The Affordable Care Act, commonly called Obamacare, though, can help, the study shows: Families with access to subsidized health coverage through the ACA were 25 percent less likely to miss rent or mortgage payments than those without.

Since being delinquent on payments can lead to eviction or foreclosure, having health care coverage lessens the chance that you end up homeless, Emily Gallagher, lead author of the study, an assistant professor of finance at the University of Colorado, Boulder, tells CNBC Make It.

"Health costs play a determinant role in the financial stability of low-income Americans," Gallagher says. "This isn't merely correlation. It is causal."

How researchers came to their conclusions

Gallagher and her colleagues looked at households that fall around the federal poverty line, and they compared states that expanded Medicaid to those that did not.

Using administrative tax data, they focused in on a subset of low-income households that didn't have access to other forms of insurance between 2014 and 2016 — so, those who would use marketplace subsidies. The researchers confirmed that access to subsidies made both renters and homeowners significantly less likely to fall behind on their home payments.

"If you are near the poverty line and lack insurance through an employer, then gaining access to the subsidized marketplace plans means that, instead of having roughly a 1-in-3 chance of being delinquent, your chances of being delinquent look more like 1-in-5," says Gallagher.

Health costs play a determinant role in the financial stability of low-income Americans. This isn't merely correlation. It is causal.
Emily Gallagher
assistant professor of finance at UC Boulder

Meanwhile, she says, "none of these same effects show up in states that expanded Medicaid, where this disparity in insurance access around the poverty line doesn't exist."

In those states, Medicaid covers households with incomes at or below 138 percent of the federal poverty level.

Missing payments can mean losing your home

The researchers estimate that 18 percent of delinquent mortgages end up in a foreclosure within two years, while roughly 12 percent of delinquent renters eventually become evicted.

"Your rent or your mortgage bill is the last bill you want to skip," Gallagher tells City Lab. "It's not that many steps away from homelessness."

A single eviction costs the community an estimated $10,000, according to the researchers' calculation. In that case, they say, the money saved preventing evictions would offset 32 percent of the cost of ACA subsidies. So, at least to some extent, they argue, Medicaid expansion pays for itself.

Expanding Medicaid has surprising benefits

This isn't the first study to demonstrate the benefits of Medicaid expansion.

After the ACA was implemented, the number of uninsured patients throughout the country dropped significantly. A growing body of evidence finds that, as coverage has increased, so has quality of care. For instance, in expansion states, the rate of early stage cancer diagnoses has gone up. So have employment rates for people with disabilities.

The benefits to a person's finances of having health insurance are even more downstream than you would expect.
Emily Gallagher
assistant professor of finance at UC Boulder

In November, Utah, Nebraska and Idaho voted to expand Medicaid. That leaves 14 states that have not. Officials in those states have cited budgetary constraints to justify their reluctance since, in accordance with the ACA, the states are responsible for 10 percent of the share of Medicaid costs.

But last year the Center on Budget and Policy Priorities pointed out that, overall, Medicaid expansion doesn't strain state budgets; instead, it can actually end up saving them money.

The new finding from Gallagher and her colleagues supports the idea that Medicaid expansion can also promote financial security for states, which might end up with fewer homeless residents and more property taxes, and for residents, who are able to afford housing.

"The benefits to a person's finances of having health insurance," Gallagher says, "are even more downstream than you would expect."

Don't miss: Here's why many prescription drugs in the US cost so much—and it's not innovation or improvement

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Participants hold signs in New York, NY while protesting efforts to repeal and replacement of the Affordable Care Act on July 29, 2017.
Pacific Press | Getty Images
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