Working Paper: NBER ID: w23139
Authors: David Slusky; Donna Ginther
Abstract: Medical divorce occurs when couples split up so that one spouse’s medical bills do not deplete the assets of the healthy spouse. It has not been studied in the economics literature, but it has been discussed by attorneys and widely reported in the media. We develop a model of medical divorce that demonstrates that divorce is optimal when a couple’s joint assets exceed the exempted asset level. We use the Affordable Care Act’s Medicaid expansion which removed asset tests to qualify for Medicaid as exogenous variation in the incidence of divorce (as it was only implemented by some states). We find that the ACA expansion decreased the prevalence of divorce by 11.6% among those ages 50–64 with a college degree. These results are robust to numerous placebo checks including older subsamples (who qualify for Medicare regardless of assets) and earlier years (before the expansion was implemented). Our results suggest that Medicaid expansion reduced medical divorce.
Keywords: Medicaid; Divorce; Affordable Care Act; Medical Divorce
JEL Codes: I13; J12
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| removal of asset tests (H53) | Medicaid expansion (I18) |
| Medicaid expansion (I18) | decrease in financial pressures leading to medical divorce (J12) |
| Medicaid expansion (I18) | reduced prevalence of medical divorce (J12) |