Cash benefits show promise in reducing emergency department visits

By decreasing the demand for more-expensive acute care relative to outpatient care, cash benefits have the potential to save the health care system money, the study said.

Although it is well-documented that poverty can be a barrier to adequate health care, it is unclear whether income support can improve outcomes and help control costs.

“Income support administered as a cash benefit could, for example, reduce financial strain and improve mental health,” according to a study published in the Journal of the American Medical Association. “It could also help pay the costs associated with accessing health care. On the other hand, a common belief about cash benefits, supported by several cross-sectional and quasi-experimental studies, is that they enable misuse of substances and alcohol to the detriment of health.”

The city of Chelsea, Mass., a low-income community near Boston, randomly assigned individuals to receive debit cards with cash benefits of up to $400 a month for nine months. Researchers examined the impact of these benefits on emergency department and outpatient care; COVID-19 vaccination; and other markers of health measured in electronic heath record data from hospitals and health systems. Among the findings:

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By decreasing the demand for more-expensive acute care relative to outpatient care, cash benefits have the potential to save the health care system money, the study said. Assuming a cost of $16,903 for a typical hospitalization, $757 for an emergency department visit and $122 for an outpatient visit, the cash benefit could have resulted in net savings to the overall health care system of approximately $450 per person over nine months. These savings would cover approximately one-sixth to one-seventh of the debit cards’ costs.

“In this randomized study, individuals who received a cash benefit had significantly less use of the emergency department, particularly for reasons related to behavioral health and substance use, and decreased admissions to the hospital from the emergency department,” researchers concluded. “They also had higher use of outpatient subspecialty care. Policies that alleviate poverty by providing income support in the form of cash benefits may produce important benefits for health and access to health care.”