EMF21-02: The Role of Health Insurance in the Latinx-White Wealth Gap in the United States

Latinx people have substantially less wealth than non-Latinx, White persons in the United States. One underexplored mechanism behind this wealth gap is healthcare coverage. This study asked: How does healthcare insurance coverage differ between Latinx and White persons, and do such differences help explain the Latinx-White wealth gap? Using the 2014 Survey of Income and Program Participation (SIPP), this study examined how healthcare insurance coverage was associated with net worth and with the probability of having any positive net worth. The analysis had two phases. First, this study conducted a decomposition of wealth differences to assess the extent to which equalizing healthcare insurance coverage would close the Latinx-White wealth gap. Second, given the differential implementation of the Affordable Care Act (ACA) across states, this study leveraged exogenous variation in state adoption to examine the wealth of Latinx and non-Latinx White persons. This study found that 1 in 4 Latinx persons between ages 26 and 62 lacked health insurance. Secondly, this study found that equalizing healthcare insurance coverage would decrease the Latinx- White wealth gap, and that healthcare coverage accounted for more of the wealth gap in the years following the start of the ACA implementation. Specifically, before the ACA’s implementation, uninsurance accounted for about 5 percent of the Latinx-white gap in having any positive net worth. This became 8 percent in the waves following the ACA’s implementation. Evidence from triple difference-in-difference models shows that the ACA had a higher effect on the continuous wealth of Latinx persons.