By Margot Sanger Katz, New York Times

Even if you lack health insurance, you’ll probably be able to get treatment at a hospital in the event of a catastrophe — you’re struck by a car, say. But having insurance can mean the difference between financial security and financial ruin.

A new study (pdf) is showing that, by giving health insurance to low-income people, the Affordable Care Act seems to have cut down on their debt substantially. It estimates that medical debt held by people newly covered by Medicaid since 2014 has been reduced by about $600 to $1,000 each year.

The study, published Monday as a working paper by the National Bureau of Economic Research, builds on earlier evidence from Oregon and Massachusetts that offering health insurance to low-income Americans can help them avoid debt and financial shocks.

I’ve written before about the big benchmarks I’m watching to evaluate the success of the health care law. Its impact on people’s financial security is an important one.

Robert Kaestner, one of the authors of the new study, said he and his co-authors think the financial impacts of Medicaid could have cascading effects for the program’s beneficiaries. Previous research has linked hospitalizations among the uninsured to higher risk of bankruptcy, unpaid bills and a lowered credit score.

“Financial distress has many subsequent consequences,” said Kaestner, a professor of health economics at the University of Illinois. “If people are skipping bills and going into debt, then it can have other repercussions — for example you lose your car, you fall behind on rent.”

This year, we heard from thousands of readers about how medical bills can alter finances and daily life.

“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,” wrote Richard Barnes, a reader who was uninsured when he was struck with appendicitis three years ago. “When I was moving in May 2015, I had extreme trouble finding somebody who would rent to me.”

A survey that The New York Times conducted with the Kaiser Family Foundation found that about one in five Americans still struggle to pay a medical bill, even after the Affordable Care Act. But several studies show that the number has declined as insurance coverage has expanded.

The new study homed in on the impacts for the lowest-income Americans. The researchers examined credit report on a sample of Americans across the country. They compared debt incurred by people in two very different sets of states: those that expanded Medicaid to provide free insurance to all individuals earning under about $16,000 and those that either chose not to cover that population or had expanded their programs earlier.

By focusing on the 25 percent of ZIP codes with the highest percentage of low-income, uninsured people before 2014, the researchers were able to compare debt incurred by people in the unchanged states with the debt of residents of states that offered new insurance options.

Over two years, they didn’t find major changes in every measure of financial distress. But Medicaid expansion did move the needle on the number of bills sent to collections and the amount of debt sent to collections. That’s important because that’s the pattern of debt-stressed people after an expensive health crisis, Kaestner said.

The researchers’ estimate of $600 to $1,000 involved some back-of-the-envelope math, but the money is substantial in the context of a population earning less than $16,000 a year. Medical debt also isn’t spread out evenly across the population; about 20 percent of low-income Medicaid beneficiaries end up hospitalized in a given year. That means that a smaller group of people was protected against huge bills.

The study had some limitations. It could look only at people who had a credit report; government research has found that about 30 percent of people with very low income aren’t tracked by the credit agencies.

The research also couldn’t tell whether any particular individual got Medicaid. Instead, it tracked everyone in the places where researchers anticipated the biggest changes in Medicaid enrollment. But the differences were clear enough that the researchers are confident that they represent a real change in the financial circumstances of people who signed up for new Medicaid plans.

The authors pointed out that the lower debt burden for the newly insured indirectly helps other people. The credit reports also track debt and unpaid bills outside of health care. The insurance coverage means more bills are paid to doctors and hospitals — but also to banks, utility companies and landlords.

Those financial ripples often receive less attention than the health law’s more obvious effects on people’s access to health care. But they are also an important effect of the law.

To Learn More:

The Effect of the Patient Protection and Affordable Care Act Medicaid Expansions on Financial Well-Being (by Luojia Hu, Robert Kaestner, Bhashkar Mazumder, Sarah Miller and Ashley Wong, National Bureau of Economic Research) (pdf)

Health Law’s Medicaid Expansion Leads Low-Level Drug Offenders toward Help, Not Jail (by Gene Johnson, Associated Press)

Health Care Law Successes Pose Problem for Republicans Who Denounce It (by Ricardo Alonso-Zaldivar, Associated Press

Poorest Patients Sued by Some Non-Profit Hospitals (by Noel Brinkerhoff, AllGov)

Group Raises $622,000 to Cancel $14.7 Million in Medical Debt for 2,700 People (by Noel Brinkerhoff and Danny Biederman, AllGov)