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• Posted July 23, 2024

Extra Money Keeps Poorer Americans Out of the ER, Study Finds

It's a simple strategy that could deliver powerful health dividends: New research shows that giving cash to poor people could help them stay out of the ER.

In the study, investigators followed nearly 2,900 low-income people who applied for a lottery in the Boston area. Almost 1,750 of them got up to $400 per month from November 2020 through August 2021.

The results? Those who received money had 27% fewer visits to an emergency room than those who didn’t get the monthly payments.

“We can trust the poor with money,” study co-author Dr. Sumit Agarwal, a physician at Brigham and Women’s Hospital in Boston, told the Associated Press. “There’s this narrative out there that you give people cash and they spend it on drugs and alcohol. I think we’re one of the first studies to really rigorously and empirically show that’s not the case.”

Instead, people in the study who received money used the emergency room less for medical issues related to behavioral health and substance use. There were no significant differences between the two groups in regular doctor visits or prescriptions, though people with the added income used more outpatient specialty care.

What happened? Greater financial stability seemed to lower their stress levels, which improved their general health, the researchers said.

"Financial strain is associated with reduced cognitive bandwidth, more mental illness and greater use of alcohol and other substances," they wrote in the study. "The cash benefit, by reducing financial strain and improving economic resilience, may have had direct positive effects on the mental health of lower-income individuals." 

When first created, the lottery was intended to ease the overall cost of living for the residents of Chelsea, a city near Boston with many low-income immigrant residents that was hit hard during the pandemic, explained then-city manager Tom Ambrosino.

“We came up with this plan to just give people money,” he told the AP. “Give them a debit card. Load it with cash, and it’ll be so much easier and more dignified for people.”

While he thought the program would have positive effects, he didn’t expect the health payoff that came with it.

“I was kind of pleasantly surprised,” he said. “It supports the proposition that universal basic income programs do work and they aren’t wasteful. People spend money on the things that we want them to spend money on: essentials.”

Earlier research on income support has shown modest health effects because they’ve largely looked at one-time payments, had fewer participants and relied on self-reported data, the researchers said.

But their study, published July 22 in the Journal of the American Medical Association, used administrative health data and measured a longer timeframe, which Agarwal noted paints a more “complete picture.”

Sara Rosenbaum, of George Washington University’s School of Public Health and Health Services, agreed that the study looks to be one of the first to link the health benefits of higher income over time to a reduction in health care costs and spending.

More information

Healthcare.gov has more on emergency care and health insurance.

SOURCES: Journal of the American Medical Association, July 22, 2024; Associated Press