A new study suggests that unrestricted cash benefits reduce healthcare utilization.

It doesn’t really matter what disease you are looking at. Cancer, heart disease, dementia, drug abuse, psychiatric disorders. In every case, poverty is associated with worse disease.

But the word “associated” is doing a lot of work there. Many of us feel that poverty itself is causally linked to worse disease outcomes through things like poor access to care and poor access to medicines.

But there is an argument that the arrow goes the other way – perhaps people with worse illness are more likely to be poor because, in this country at least, being sick is incredibly expensive.

Causality is what all medical research is fundamentally about. We want to know if A causes B because if A causes B, then changing A changes B. If poverty causes bad health outcomes, then alleviating poverty should alleviate bad health outcomes.

But that’s a hard proposition to test. I mean, you can’t exactly randomize some people to get extra money and some not to, right? Actually, you can. And, in Massachusetts, they did.

OK – what happened in Chelsea, Massachusetts wasn’t exactly a randomized trial of cash supplementation to avoid bad health outcomes. It was actually a government program instituted during the Pandemic. Chelsea, MA has a large immigrant population, many of whom are living in poverty. From April to August 2020, the city ran a food distribution program to aid those in need. But the decision was then made to convert the money spent on that program to cash distributions – free of obligations. Chelsea residents making less than 30% of the Median income for the Boston Metro area – around $30,000 per family – were invited to enter a lottery. Only one member of any given family could enter. If selected, an individual would receive $200 a month, or $300 for a family of 2, or $400 for a family of three or more. These payments went on for about 9 months.

The key thing here is that not everyone won the lottery. The lottery picked winners randomly. 1,746 individuals were selected to receive the benefits – in the form of a reloadable gift card – and 1,134 applied but did not receive any assistance.

This is a perfect natural experiment. As you can see here, and as expected given the lottery winners were chosen randomly, winners and losers were similar in terms of age, sex, race, language, income, and more.

Researchers, led by Sumit Agarwal at the Brigham, leveraged that randomization to ask how these cash benefits would affect health care utilization. Their results appeared this week in JAMA.

But I think I know what you’re thinking. Is $400 a month really enough to make a difference? Does $400 a month, less than $5000 a year, really fix poverty? We’ll get to that. But I will point out that the average family income of individuals in this study was about $1400 a month. An extra $400 might not change someone’s life, but it may really make a difference.

OK the primary outcome of this study was ED visits. There are a few ways this could go. Perhaps the money would lead to improved health and thus fewer ED visits. Or perhaps it would help people get transportation to primary care or other services that would offload the ED. Or maybe it would make things worse. Some folks have suggested that cash payments may increase the use of drugs and alcohol, and lead to more ED visits associated with the complications of those substances.

Here's the actual data. Per 1000 individuals, there were 217 ED visits in the cash benefit group, 318 in the no benefit group. That was a statistically significant finding.

Breaking those ED visits down, you can see that there were fewer visits that resulted in hospital admission, fewer behavioral-health related visits, and – a key finding – fewer visits for substance use disorder. This puts the lie to the idea that cash benefits increase drug use.

But the authors also looked at other causes of healthcare utilization. Outpatient visits were slightly higher in the cash benefit group, driven largely by an increase in specialty care visits. The authors note that this is likely due to the fact that reaching a specialist often requires more travel, which can be costly. Indeed, this effect was most pronounced among the people living furthest from a specialty center.

Outside of utilization, they examined a variety of individual health markers – things like blood pressure – to see if the cash benefit had any effect. A bit of caution here because this data was only available among those who interacted with the health care system which may bias the results a bit. Regardless – no major differences were seen in blood pressure, weight, hemoglobin A1C, cholesterol, or Covid vaccination.

So it seems like $400 a month doesn’t move the needle too much on risk factors for cardiovascular disease. But the effect on ED visits on their own is fairly impressive.

Is it worth it? The authors did their best to calculate the net effect of this program accounting for the reduced ED visits and hospitalizations (that’s a big one), but also the increased number of specialty visits. All told, the program saves about $450 per person in healthcare costs over 9 months. That’s about 1/7th of the cost of the overall program.

But remember that they only looked at outcomes for the individual who got the gift cards – it’s likely there were benefits to their family members as well. And, of course, programs like this can recoup costs indirectly though increases in economic activity- a phenomenon known as the multiplier effect.

But I’m not here to tell you whether this program was a good idea – people tend to have quite strong feelings about that sort of thing. But I can tell you what it tells me about healthcare in America. It may not be surprising, but it confirms that access is far from fairly distributed.

I started this story asking about the arrow of causality between poverty and poor health. The truth is, you probably have causality in both directions. Making people healthier will make them less poor. And, as this study suggests, making them less poor may make them healthier.

A version of this commentary first appeared on Medscape.com.

Methods Man Blog

Can Reducing Poverty Improve Health?

A new study suggests that unrestricted cash benefits reduce healthcare utilization.

The Methods Man