The short‐term effects of the earned income tax credit on health care expenditures among US adults

OBJECTIVE: To test the hypothesis that the earned income tax credit (EITC)-the largest US poverty alleviation program-affects short-term health care expenditures among US adults. DATA SOURCES: Adult participants in the 1997-2012 waves of the US Medical Expenditure Panel Survey (MEPS) (N = 1 282 080). STUDY DESIGN: We conducted difference-in-differences analyses, comparing health care expenditures among EITC-eligible adults in February (immediately following EITC refund receipt) with expenditures during other months, using non-EITC-eligible individuals to difference out seasonal variation in health care expenditures. Outcomes included total out-of-pocket expenditures as well as spending on specific categories such as outpatient visits and inpatient hospitalizations. We conducted subgroup analyses to examine heterogeneity by insurance status. PRINCIPAL FINDINGS: EITC refund receipt was not associated with short-term changes in total expenditures, nor any expenditure subcategories. Results were similar by insurance status and robust to numerous alternative specifications. CONCLUSIONS: EITC refunds are not associated with short-term changes in health care expenditures among US adults. This may be because the refund is spent on other expenses, because of income smoothing, or because of similar refund-related variation in health care expenditures among noneligible adults. Future studies should examine whether other types of income supplementation affect health care expenditures, particularly among individuals in poverty.