Medical debt vs. Medicaid expansion: One state has a clear winner

By Dave Pearson / April 27, 2026

One state’s Medicaid expansion program is benefiting enrollees with, among other pluses, durable relief from medical debt. 

That positive outcome has been demonstrated before, but this may the first time it’s been shown to last for as many as seven years post-enrollment. 

Researchers at the University of Michigan describe the success with the Healthy Michigan Plan, or “HMP,” in a study published by JAMA Network Open April 27.

Nora Becker, MD, PhD, and colleagues at the university’s Institute for Healthcare Policy and Innovation analyzed individual-level credit data from around 575,000 HMP enrollees. 

The team found MHP enrollment correlated with substantial reductions in medical debt as signaled by collections activity and subprime credit scores.

What’s more, the effect increased over time. 

“By seven years after enrollment, the reductions in medical debt in collections and subprime credit score were very large,” Becker and co-authors report.

How large? Large enough to include a 30% to 50% relative reduction in rates of subprime credit score—and, “if we choose the peak average medical debt in collections seen over our study period, a 75% relative reduction in medical debt in collections.”

The associations were supported by the lack of any links between HMP enrollment and non-medical debt. 

Improving financial fitness increases healthcare access 

Becker and team point out that cutting healthcare consumers’ medical debt may redound to the betterment of their overall quality of life.  

Reductions in medical debt “may be associated with improvements in enrollees’ ability to access care and their subsequent health and financial wellbeing,” Becker and co-authors remark.

They call for studies to look into the specific mechanisms underlying their findings as well as even longer-term health benefits associated with relief from medical debt. 

Magnifying Medicaid’s ROI 

In coverage of the research by Michigan Medicine, Becker says it’s widely known that medical debt frequently prompts patients to forego healthcare, sometimes worsening their mental as well as physical health status. 

“People with more financial security earn higher incomes and pay more taxes in the future, so Medicaid expansion may also have benefits for state and local government budgets as well,” Becker adds. “This is why it’s important to look at personal financial factors over time to give a full picture of Medicaid expansion’s impacts.”

Michigan Medicine’s Institute for Healthcare Policy & Innovation has posted a 1.5-page brief on the work. 

The present study’s findings “underscore that Medicaid expansion can reduce medical-related financial stress and strengthen the economic stability of low-income individuals, families and communities,” the brief states. “Policies that limit or disrupt Medicaid enrollment may have a negative impact on financial stability among low-income populations.”

Medicaid expansion is, of course, a political hot-button issue. It’s generally favored by Democrats and disfavored by Republicans.