Free Cash Cards to Improve Health?

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 Mass 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…